Cellebrite DI (NASDAQ:CLBT) reported second-quarter results that fell short of its expectations for annual recurring revenue, citing delayed large transactions, slower-than-anticipated pricing and expansion gains from customer migrations, and added procurement requirements for cloud and artificial intelligence offerings. The company lowered its full-year ARR and revenue outlook while raising its adjusted EBITDA target.
The company also announced that Shiv Ramji became chief executive officer effective immediately, succeeding Tom Hogan. Hogan, who joined Cellebrite three years ago as executive chairman and became CEO last year, will remain an adviser to Ramji and the board.
Second-quarter performance and revised outlook
Cellebrite reported ARR of $508 million at the end of the second quarter, up 21% year over year but below the low end of its guidance range. Revenue rose 16% to $131 million, including $119.5 million of subscription revenue, which represented 91% of total revenue.
Gross profit increased 16% to $112 million, for an 86% gross margin. Adjusted EBITDA was $31.8 million, representing a 24% margin. The company reported operating income of $29.8 million and net income of $29.7 million, or $0.11 per fully diluted share.
Cash equivalents and investments totaled $546 million at quarter-end. Trailing 12-month free cash flow was $144.2 million, or a 28% margin, though CFO David Barter said free cash flow reflected deal structures and collections that arrived during the first week of July. He added that prior-year free cash flow had benefited from a one-time tax refund of about $9 million.
The company reduced its full-year 2026 ARR outlook to a range of $550 million to $560 million, representing 14% to 16% growth. The midpoint was lowered by $15 million. Full-year revenue guidance was reduced to $555 million to $561 million, representing growth of 17% to 18%.
At the same time, Cellebrite raised its full-year adjusted EBITDA outlook to $153 million to $159 million, or a 28% margin. The outlook includes nearly three percentage points of foreign-exchange headwinds from the Israeli shekel, according to Barter.
For the third quarter, the company forecast ARR of $524 million to $528 million, revenue of $145 million to $148 million, and adjusted EBITDA of $42 million to $45 million, implying a 29% to 30% adjusted EBITDA margin.
Delayed deals and migration dynamics
Ramji said the company had expected a meaningful acceleration in the second quarter, but it did not occur at the anticipated level. The immediate shortfall was concentrated in a limited number of large transactions that moved beyond expected closing timelines.
He said certain U.S. federal and European government opportunities encountered additional administrative and procurement requirements related to Cellebrite’s foreign-entity status. Larger cloud and AI transactions also involve more stakeholders and, in some cases, longer procurement cycles.
“Timing is not an excuse,” Ramji said, adding that the company needs to identify risks earlier, improve execution and forecast with greater precision.
CRO Marcus Jewell said federal cloud-related transactions faced new permit requirements for foreign entities, including a process that delayed some orders by four to five weeks. He said the company has since secured a master foreign-entity permit at a departmental level that should expedite processing.
In Europe, Jewell said certain customer transitions to cloud services in Germany and the United Kingdom required reviews under freedom-of-information rules. The reviews focused on ensuring data was stored in sovereign locations and that Cellebrite was unable to access customer information. He said four cloud-related deals that had slipped were subsequently secured.
Jewell told analysts that no delayed deals were lost and that approximately $4 million of slipped business had closed and been booked by the time of the call. He estimated the sales-cycle extension at roughly six weeks.
The company also cited lower-than-expected ARR uplift from Inseyets migrations, particularly among U.S. state and local government customers. Ramji said Cellebrite had converted nearly 65% of its installed base to Inseyets by the end of the quarter, but pricing and footprint expansion at the time of conversion were less than expected.
Barter said the magnitude of customer migrations was nearly consistent with the prior year, but the company captured less incremental price and quantity expansion from those conversions. He added that gross revenue retention continued to improve and was up several points for Inseyets customers.
New products and federal momentum
Management pointed to growth in newer offerings as evidence that its broader platform strategy is gaining adoption. Growth products contributed 25% of the company’s $15 million sequential ARR increase, compared with 18% in the prior quarter.
Advanced Unlocks and Guardian Investigate were in their first full quarter of availability and each added meaningful net new ARR, Barter said. Guardian Investigate carries a higher price than Guardian Forensics because of the volume of evidence stored and its AI capabilities.
Genesis, launched June 10, generated about $400,000 in ARR during the final weeks of the quarter and had secured more than half a dozen customer wins by quarter-end. The consumption-based product uses tokens and is intended to help customers compress investigative workflows. Barter said Genesis had approached $1 million of ARR since quarter-end, with customers ranging from international police organizations and state attorneys general to enterprise users.
The company also secured its first major FedRAMP Guardian deal with a longstanding U.S. federal customer. The multi-product, multimillion-dollar agreement included an initial seven-figure Guardian order that Ramji said was nearly 35 times the roughly $50,000 average annual Guardian spend of a state or local government agency.
Defense and intelligence ARR grew 25% in the quarter, while U.S. federal growth accelerated into the mid-teens after ending 2025 flat, according to management. Regionally, ARR growth was 19% in the Americas, 23% in EMEA and 29% in APAC.
Platform priorities under new leadership
Ramji said Cellebrite’s strategy is to build an investigative intelligence platform that turns digital data from devices, cloud sources and other environments into actionable, evidence-grade insights. The company is developing a shared AI layer intended to incorporate forensic context, models and agents with controls for provenance, verification, auditability and human oversight.
Second-half priorities include expanding Genesis into high-security and on-premise environments. Ramji said Cellebrite has secured an agreement with an anchor customer for an air-gapped offering. The company also plans to pursue additional law-enforcement and enterprise applications for Corellium and continue developing drone forensics capabilities.
Ramji said the company would emphasize greater rigor in qualifying opportunities, validating procurement milestones, assessing customer commitments and improving cross-functional ownership of large transactions. “Pipeline is not performance,” he said.
About Cellebrite DI (NASDAQ:CLBT)
Cellebrite DI is a global provider of digital intelligence and forensics solutions that enable law enforcement agencies, government bodies and enterprises to extract, analyze and act on data from mobile devices, cloud services and digital sources. The company’s technology is designed to accelerate investigations, support evidence-based decision-making and enhance security operations by delivering actionable intelligence in a secure, scalable platform.
The company’s flagship offerings include the Universal Forensic Extraction Device (UFED) series for data acquisition and decoding, Physical Analyzer for advanced data parsing and visualization, and Pathfinder for case-driven investigation workflows.
