All right, good morning, everybody. My name is Shaul Eyal. I'm the equity research analyst covering Cellebrite. We are very happy to host Cellebrite's management, Dana Gerner, CFO, Andy Kramer, VP of IR. This is a fireside chat. By all means, feel free to raise your hands and keep it as interactive as possible. Thank you so much for joining us. Appreciate it. Dana, for the benefit of the audience, slightly less familiar with Cellebrite, can you provide us maybe with a snapshot of the company, its market, what is it that essentially you guys do for a living? Okay. Really brief. First, thank you for having us here. It's a pleasure. Sure. Cellebrite is a leader in digital investigation solutions. So we actually provide solution that help accelerate justice to many law enforcement agencies around the globe. And our solution actually are being used from the opening of a case, investigative case, until the closure and submission to the district attorney to, for prosecution, or just closing the case as is. So this is what we are doing. Our market, which is being served with our solution, is a $60 billion TAM market. Around $14 billion of that relevant to the public sector, which means law enforcement agencies and government agencies, and around $2 billion relevant to a private sector business that we serve around e-discovery and internal investigations. Vast majority of the business is coming from the public sector, a little bit more than 90%, a little bit shy than 10% is actually the private sector, and almost 90% of the business is actually software solutions that we are subscribing our customer on. The company is serving mainly the largest law enforcement agency in the Western world and in Asia Pacific. We are very proud by the mere fact that almost all customers that we want to be our customers are actually our customers and very loyal for many years. That's great. As we think about the drivers propelling the market opportunity, what would those be? So unfortunately for all of us as citizens, crime is on the rise, and digital crime even more so as criminals become more tech savvy, and by the mere fact that all of us, and I see it on the tables here, are carrying smartphones, which are actually the actual digital evidence of our lives. So whatever we do and how we do it, in 99% of the cases, is captured on the mobile phones we are carrying with us. So taking into consideration that crime is on the rise and the fact that now almost each and every investigation involve digital evidence, and the most important digital evidence in an investigation is the mobile phone of either the victim, the suspects, the witnesses. Our customers are overflown by the increasing volume of digital evidence that they need to process and the level of complexity of this evidence over the year. As I said, mostly phones, but if you think about the amount of cloud applications that we are using in our day-to-day, computers, wearables, CCTV, call records, even our vehicle is a crime scene because most vehicles are now being propelled by computers. So this is one of the biggest drivers of the need for software solutions, because, on the other hand, our customers, and again, many law enforcement agencies, their budget don't grow 15%-30% year-over-year, which is actually the pace of growth of digital evidence. So if we look at their needs, they need to bridge this gap, and the only way to bridge the gap is actually introduction of a disruptive technology like ours, that brings capabilities, and efficiencies, and process management, and hosting, and collaboration solutions to our customers to be able to be much more efficient and focus on what they need to do, and which is find the criminal, close the case, and bring peace to the people that have been hurt by those predators and offenders. So this is what we are doing. We have actually introduced early this year our Case-to-Closure platform as part of our transition of the offering to the SaaS. It's not just go-to-market statement, it's also backed up by a very savvy and detailed roadmap of offering. The market that we are playing with and serving was, is traditionally using on-prem solutions, but again, with the challenges of dealing with capacity and, inflation of data, the need for cloud-based computing power, for hosting, for collaboration solution, just, is, is just lending itself naturally to transition the offering over time to the cloud, and this is what we are doing now. We have part of our solution already, cloud native and SaaS native, and some of them are partially being served through the cloud, and we will continue this journey with our customers, allowing them to streamline their entire investigation process. Given you brought up C2C, maybe good opportunity also to bring Inseyets into the equation, the discussion. Can you maybe just provide us with one or even two use cases whereby the robust end-to-end platform has been put to use and its outcome? So maybe I'll say one word about Inseyets, and maybe Andy will give the example. For those of you who do not know, Inseyets is our new generation of collection, decoding, and review of digital evidence, mostly from mobile, but also from other sources like cloud applications and computer. This is a new generation of our legacy UFED and Physical Analyzer solution that have been introduced and upgraded over the years since 2008, and it is the most common used solution with digital forensics units. We have around 50% market share around mobile challenges, and 40% market share if we include also other sources. And this new generation offering, the Inseyets, is actually the one that provides access to cloud capabilities, collaboration, and is providing much more, I would say, efficiency in the workflow in the digital forensics unit. Maybe some more cases, Andy? Yeah, sure. So, you know, I think what we tried to highlight, you know, on our last quarter's call and what we try to do on a very consistent quarterly basis, is to showcase, you know, the practical uses of our technology, why customers are embracing not only where we've always been strong, which is in helping, our customers, make digital evidence more accessible, more intelligent, more actionable, and defensible, but really how they can use that throughout the entire workflow of an investigation. So, you know, where Inseyets, it, you know, really makes a profound difference is in the overall sort of throughput, the speed at which they can examine a phone, take a process that could take, 6-12 hours, condense that, you know, and, and do it twice as fast. And, you know, ultimately, when you have, you know, for example, a very large, national police force, for a country in South America, you know, for them, upgrading to Inseyets was an opportunity not only to do things faster, but to improve their access, capability. So the ability to lawfully access a device that's locked. Today, two-thirds of the phones that come into a lab are locked, which means they need advanced tools, to gain access to that phone, typically through a warrant, that's issued, and to do that lawfully and to do that with, speed and precision. So, you know, what we're seeing is that add-on capability, that add-on module for Lawful Access, has grown from low double digits in terms of attach rates, to the mid-twenties over the past, probably five quarters or so, and we see significant scope for improvement there. You know, we've continued to see adoption of our investigative analytics, our case and evidence management solution. For example, there was an agency, a police department, down in the southeast region of the United States. Previously, their detectives would get you know, leave their precinct building, go to the central lab, it could take them 20-30 minutes, drop off a device, and have to return once that device had been examined to pick up the evidence report. They had to purchase out of their own pockets the USB drives that those evidence reports would be loaded onto. Our Guardian solution eliminates all of that time-consuming laborious process of just picking up and dropping off evidence, creating an audit trail of who's accessed that information. So it saves them time, saves them money, and that's time that they can rededicate to their core purpose, which is to solve more cases faster. Understood. I wanna go back and revisit your Analyst Day hosted just a little over two months ago. And revisit some of the targets, the long-term targets you've laid out, $1 billion of ARR by 2028. Yeah. Talk to us about, you know, some of those assumptions and the thought process behind it, how we get there. Yeah. So I would say that we always build a model bottom-up, top-down to validate our assumptions. But if we start with where we started our discussion today, and this is the main, the main pain that our customer has dealing with, the capacity challenges, the model is based on the fact that customers within the digital forensics unit, but mostly also outside of the digital forensics unit, will need to be able to deal with better solutions to cater those needs because they are limited from a headcount perspective. And so our business model is based on dealing with the capacity-growing challenge, growing 15% year-over-year. This is like based on market analysis that we've done, this is like the minimal growth that we are seeing. Currently, the market, which is ranging between 15%-30% growth of digital evidence coming to the labs every year. And on top of that, we are adding the advanced solution that alluded to by Andy, which are the collaboration solutions and evidence and case management, the Guardian, which is a very new solution, and actually, it's in very infant penetration stages. And our investigative analytics, which is currently from a delivery perspective, is catering only the larger customers, and through our transition to the cloud, we'll be able to serve our entire install base of customers in the coming future. So taking into consideration, 15% growth in capacity that needs to be served, adding to that solutions which are in a very early penetration stage, like the Guardian and the Pathfinder, including the transition to the cloud, that based on our research, should grow 35%-50% year-over-year. And adding to that is a very moderate price increase, as we are a subscription business. We assume mid- to- low-single-digit price increase year-over-year, and you get to the $1 billion. Of course, add to that also the business in the private sector that we have, which we also applied a very moderate growth- Mm-hmm A s we are currently limiting our model to what we are doing now and not to future advantages in this market. You know, when you take a look at the potential to grow very consistently the ARR of our business, you know, that will convert to very healthy revenue growth. You know, 82%-84% gross margin. You know, I think that as we manage the business and you look at the top-line growth, the ability to focus investment in areas as Dana said, advanced evidence acquisition on the R&D side, AI and automation and cloud migration transition. You know, those levels of investments are all factored into profitability on an adjusted EBITDA basis. That should be 20%+. I think that as a baseline for managing the business, we'd want investors to think about a Rule of 45, you know, with the ARR growth plus the adjusted EBITDA margin of the business. I would say one more word. You know, we are, in every earnings release, provide some samples of penetrating our customers with advanced solutions that they have not been subscribing before. And every time that the customer decides to either adopt our advanced lawful extraction capabilities and mostly adding the case management through Guardian and Pathfinder, our investigative solution, we see ARR growth amounting to 30% of their current, and sometimes even doubling and multiplying their spending with us. When we speak about investigative units, and I think many people ask us about why most of our growth is coming from expansion within existing customers, we are talking about logos. And within this logo, there are many new customers which we look at as expansion and not as new logo. So think about it, that every digital forensics unit is serving multiple investigative units, whether it's homicide, gangs, trafficking, drugs, and so forth. The exponential potential of growth there is very high, and we believe that our growth model had captured it in a very moderate manner. As you've embarked on this trip towards a Rule of 45 company, let's double-click on the recent 1Q results, you know, that was announced last week. So you beat all metrics, and yet you have kept your 2024 guidance intact. Is that just a matter of being prudently conservative? Or how should that... You know, what should have been a seasonally the weakest quarter in software, and here you guys come and kind of put up, you know, these great results. So, help us reconcile both views. So, you know, Shaul, we have taken strides to try to be very transparent with the market, and we have moved this year to provide quarterly guidance, which we have never done in the past three years. And the idea was to first help our investors understand the growth path of the company and some of the seasonality that we have, which is actually attached to the seasonality of spending in the year-end budgets of our customers. And then I was also not to touch the annual guidance on a constant basis every time we make an earnings release, and we are doing some bit of the previous annual guidance and market expectations. We are very early into 2024. Like every year, the challenges are ahead of us. We had provided, I believe, a healthy guidance for Q2 ahead of the market expectations and consensus, and we would revisit the annual guidance when we finish Q2 and see if there is any need to upgrade, update, or change the annual guidance. We are committed to perform and outperform market expectations. We are very focused on execution. We are very focused on execution, not only on the top line, on the ARR and revenue, but also continue to provide profitable business with positive cash flow. We might be considered to be a little bit conservative, but we believe that this is the way to manage our business and market expectations. Right on. Gen AI has been topic du jour-... this year, last year. How do you see that impacting the way your, you know, the adversaries are thinking about their new solutions? And how do you think about continuing to defend against your adversaries? . So AI is something that Cellebrite is introducing to their, its solution for years now. So Physical Analyzer, our main review solution for the examiners in the labs is using AI and machine learning modules that we have introduced for years now. I think the most advanced AI capabilities are actually utilized by our Pathfinder or investigative analytics solution, because in this solution, we are merging together evidence which is coming from multiple sources, and the ability to create one narrative is very difficult without using those solutions. Andy, you want to elaborate on that, maybe? Yeah, no, I mean, I think what we tried to do during our Investor Day is sort of take a look into the past in terms of what we've delivered, take a look into the present in terms of what we're delivering today, and give a glimpse into the future. And so I think that, you know, in the past, we've, you know, built our own machine learning models and trained our capabilities accordingly. I think that as we look forward, Generative AI applied with good thought and intention and using technology to limit risk mitigation in terms of where it's applied, you know, can really augment the building of a case and supporting the case. It won't create or develop new evidence, but it's really used as a force multiplier to help a detective or detectives work smarter, work faster, eliminate you know, just the cycles that they could spend, for example, just drafting a narrative. So, you know, I think that's how we're thinking about tools like generative AI. It's complementary to the core investment we make in Artificial Intelligence and machine learning models. We actually invite everyone to go into the material of the Investors Day. The presentation that was provided by our Chief Product and Technology Officer included those examples of what we've done, what we are doing, and what we expect to do. Mm-hmm. And, uh- And, and, and- I think it, you know, just seeing it makes it very clear what can Gen AI help and within our offering to our customers in the way they work. Yeah. I mean, I think that, you know, when you think about AI and how we've applied it, you know, it's... for example, doing image similarity analysis, so that if you're trying to look through thousands of images, you know, that's challenging just to find the needle in the haystack. You want to find weapons, makes it much easier. But think about the mental toll, excuse me, that it can take on an investigator who's looking at child exploitation material day in, day out, right? Being able to identify those images through automation, through AI is, you know, saves cycles and, you know, can ultimately prolong somebody's career. You know, I think that as we apply that to things, looking at language, not only, you know, foreign languages, but the language of crime. You know, I think that we're trying to be very pragmatic in how we've applied AI, you know, in terms of the current set of capabilities, and we'll continue to do that as we move forward. Questions from the audience before we proceed? Hugh, front here. Hi. A couple quick ones. First of all, thanks for all the guidance. Thanks for mentioning the sub logos that tends to understate your new customers. There's another piece, the buying behavior I want to ask you about, which is some volatility introduced because of task forces- Correct And the way that works. And then, Andy, I did want to ask you. First of all, can I use this, the language of crime you just mentioned? I hadn't heard that before. But can you talk about the relationship with your customers? You had a couple of guys from state police, the analyst day, and one of them, I think, talked about a storeroom filled with a backlog of cell phones- Mm-hmm on that report. Sure. Why don't you start and- Okay, so maybe I'll start with the backlog. So, you know, one of the advantages or characteristics of our, of our business is the fact that we are certainly not an offensive cyber company, so we are not planting or implanting any capabilities into someone's phones for surveilling purposes. Our technology is being used after evidence is being collected, and mobile phone is part of the evidence. And in many cases, as Andy alluded before, 60% of those phones are coming locked. And to overcome unlock, not always is an immediate process. We are proud by being able to provide for most cases, a very fast capability, but in some cases, it takes time. Our customers know that it is best to maintain a phone alive until the technology would catch up and new vulnerabilities will be found to be able to access phones that cannot be accessed at this stage. So what they are doing, they are storing it in places where they actually keep the phones charged at any given time, because you can either access a phone when it's charged in one technology or when it's dead, and in many cases, it's dead, to another technology. So if it is alive, they are now educated to keep it alive for as long as it takes, until we can come with a breakthrough from a technology point of view. And so when you think about, though, the backlog that exists across you know, national, regional, local police forces, it's pretty staggering. I mean, state of Tennessee, their Bureau of Investigation is sitting on a year's worth of devices, and that's a huge impediment to resolving cases. If you can't get to the evidence quickly, you know, your investigation is going to stall. And so I think that ultimately, you know, tools like, and, and solutions like Inseyets, you know, provide the ability to complete that process much faster. And knowing that there is an enormous backlog of devices and cases, you know, ultimately, that problem's not gonna be solved overnight. But, you know, I think the positive thing is that we've got a great solution that can help them move faster than they've ever moved to make a dent into that, into that situation. And, you know, I think so. I think that, you know, from that perspective, you know, ultimately, what we wanna do is to be able to democratize the solution, to make it available with the set of capabilities that are right for the customer. Larger agencies that have more technical sophistication are gonna look to capitalize on that, and they'll have a solution that, you know, will meet their needs. Smaller agencies, maybe they only have one or two examiners, their needs are gonna be much more finite. Inseyets, I think, is a solution that can be right-sized by the agency's capabilities and budgets. And one of the capabilities that it brings to help deal with this backlog, which is not a technological barrier, but just a processing backlog because they don't have enough hands, is the ability to do triage. So to take a decision whether about the importance of this digital evidence to the investigation, and whether they should spend more time on trying to investigate this source. So we are providing triage capabilities already in the field when the police force are collecting the evidence. And then after, when it enters, or should it enter the forensics lab, which can take substantial part of the backlog away and allow them to move faster with what is important for the evidence. So, it's not an easy technological solution, but it's very, very efficient for them, so we invested a lot in introducing it to the market. Yeah. And I think, you know, related to your point and question around sub logos and opportunities for expansion, you know, I think we've done a lot of investment, smart investment, under our new Chief Revenue Officer, to be very thoughtful about resource allocation and the go-to-market and the quota-carrying sales force. So I think as we move forward, you know, there'll be... you know, there's more feet on the street, so to speak, better optimization of resources so that, you know, we can pursue and capitalize on the opportunities we see for new sales, focus resources and talent on renewals as that becomes appropriate, make prudent bets on different parts of our customer segmentation, where we see meaningful growth opportunity, whether it's in the U.S. with our state and local government agencies and in Europe with those equivalents. And, you know, I think as that happens, you know, you allow the hunters to hunt. We're overlaying the quota-carrying sales force with specialists who are focused on the investigative unit and the solutions that they need. Those tend to be longer lead time opportunities that need to be nurtured, and the mentality and skill set for building those relationships and moving deals through those pipelines are a bit different than those who might be focused on the digital forensic units, which typically have shorter sales cycles. So I think between all of that, you know, ultimately, we'll be able to make more progress expanding existing customer relationships, and at the same time, free up resources that can potentially, you know, help us attract new logos. Because there are new customers to win, both in the public and the private side, and, you know, I think that contributes modestly, low single digits, to our growth, ARR growth, in any given quarter. And, you know, potentially, we could do a little bit better than that. Wait. Who do you consider as your, you know, top competitive product when you, you know, bid for all those opportunities? Who do you see the most? Question about the competitive landscape. So if you look at the competitive landscape, I will differentiate between what happens within the digital forensics unit and what happens with the investigative units, as the competitive landscape changes between the two. In the digital forensics unit, our biggest competitor is a company called Magnet, who started its business on computer forensics and added some mobile capabilities through a merger with another company. In the public sector, we are still leading by far on them, both from a technological perspective and penetration, and being in a multi-vendor environment, and digital forensics unit is a multi-vendor environment, being the primary solution for the vast majority of our customers. There are also other players, like MSAB, Oxygen, that provide solutions to either phone models that we have decided not to give or being a cheaper supplementals for validation purposes and so forth. No one vendor can cover the entire environment here. Think just about the number of cloud applications there. Stepping away into evidence management and case management, we see Magnet making first steps into that as well, where we are already there for the last 1.5 to 2. We have larger companies like NICE Public Safety Division, which is providing case management solutions. This is a very immense market here now and not penetrated at all. So all of us vendors have very small market share with our customers there. The investigative units are very interesting. They are traditionally a very manual work environment. Through the years, various vendors started providing a dedicated solution to dedicated sources. So if before that it was mostly very generic Tableau-like, Qlik-like solutions, to augment data, on the one hand, and on the other hand, very sophisticated, fusion solutions like Palantir, that can only be serving the large customers. I know the time is up. In the middle, there are like solutions like of Nuix for computer forensics, solutions for call records or for warrant returns. Our solution is mainly catering the mobile. This is where we are coming, and this is the most complex dataset there, but it's also complemented by the ability to process Inseyets computers, cloud, and so forth. Again, this is a very initial stages. But we see that when we are making successful penetration, the level of adoption and the retention rate is very high. With that, Dana, Andy, thank you so much. Thank you, everybody, for attending. Thank you for attending. Thank you.