Cellebrite reported its second quarter on 13 August, and in that same release announced a change of chief executive. We are writing about it today.
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
What the Company Does
Cellebrite, of Petah Tikva, sells digital investigation tools. Its products allow law enforcement, security and intelligence agencies to extract data from mobile devices and analyse it. The model is subscription based, and so the central metric the company manages to is not quarterly revenue but ARR - annual recurring revenue.
The Quarter
| The quarter | |
|---|---|
| Revenue | $131.1 million |
| Year-over-year change | 16% |
| Subscription revenue | $119.5 million |
| ARR | $507.8 million |
| ARR change | 21% |
| Dollar-based net retention | 117% |
| GAAP gross margin | 80.8% |
| Non-GAAP gross margin | 85.5% |
| GAAP net income | $6.4 million |
| Non-GAAP net income | $29.7 million |
| GAAP diluted earnings per share | $0.02 |
| Non-GAAP earnings per share | $0.11 |
| Adjusted EBITDA | $31.8 million |
| Adjusted EBITDA margin | 24.2% |
| Free cash flow, trailing twelve months | $144.2 million |
What Happened, by the Company's Own Numbers
This is the cleanest way to read the quarter: compare it with the guidance Cellebrite itself gave on 14 May.
| Second quarter | May guidance | Actual | |
|---|---|---|---|
| ARR | $510-513 million | $507.8 million | below the range |
| Revenue | $130-133 million | $131.1 million | within the range |
| Adjusted EBITDA | $29-31 million | $31.8 million | above the range |
The metric the company manages to is the only one that missed. Revenue landed in the middle of its range, profitability beat it - and ARR, which is the base for all future revenue in a subscription model, fell below it.
The incoming CEO says so explicitly: growth in the quarter was healthy in Asia-Pacific, EMEA and US Federal, "however, ARR came in below our expectations. We saw longer sales cycles and less expansion from Inseyets conversions than anticipated."
The Guidance: Growth Cut, Profitability Raised
| Full-year 2026 | As stated 14 May | As stated 13 August |
|---|---|---|
| ARR | $567-573 million | $550-560 million |
| ARR growth | 18%-19% | 14%-16% |
| Revenue | $565-571 million | $555-561 million |
| Revenue growth | 19%-20% | 17%-18% |
| Adjusted EBITDA | $149-155 million | $153-159 million |
| Adjusted EBITDA margin | 26%-27% | about 28% |
At the midpoints: ARR fell by about $15 million, revenue by about $10 million, and adjusted EBITDA rose by about $4 million.
This is a deliberate exchange of growth for profitability, and the company presents it that way: "continued operating discipline has enabled us to raise our FY26 adjusted EBITDA target."
And what matters to understand in a subscription model: ARR is not a measure of the quarter - it is the base from which every subsequent quarter's revenue is derived. Cutting $15 million from the year-end ARR target does not stop at 2026. It moves the starting point of 2027.
Profitability can be improved by a management decision. A recurring revenue base is built over time.
And Ramji explains the choice: "We believe resetting expectations now is the responsible approach and provides a more appropriate foundation from which to execute."
Third Quarter Guidance
| Third quarter 2026 | |
|---|---|
| ARR | $524-528 million |
| Revenue | $145-148 million |
| Adjusted EBITDA | $42-45 million |
| Adjusted EBITDA margin | 29%-30% |
The midpoint of the revenue guidance is growth of about 12% over the second quarter. But adjusted EBITDA is meant to jump from $31.8 million to $43.5 million at the midpoint - about 37%.
That is to say, the company is promising a meaningful margin improvement as soon as next quarter, not merely across the year.
The CEO Change
Shiven Ramji succeeds Thomas Hogan, effective immediately, and will join the board. Ramji joined Cellebrite only in May 2026, as President of Products and Technology.
Hogan, according to the release, joined as Executive Chairman in August 2023, became interim CEO in January 2025, and was appointed CEO in August 2025 - meaning he held the full role for about one year.
The company presents this as a planned succession. Board Chairman Adam Clammer notes that one of Hogan's most important contributions was building a team, and "Shiv's succession is the clearest proof of his success in this endeavor".
What is worth recording without interpreting: Ramji has been at the company three months, the appointment is effective immediately, and it was published in the same release in which the full-year guidance was cut. The release does not connect the two.
In a separate filing with the SEC it was disclosed that Hogan also resigned from the board and agreed to serve as an adviser to the company for six months.
And What Does Work
The margins. A GAAP gross margin of 80.8% and non-GAAP of 85.5% are the levels of a mature software company.
Customer retention. A dollar-based net retention rate of 117% means existing customers spent 17% more this year than last, before any new customers - and it rose two points from the first quarter.
And the cash flow. $144.2 million over the trailing twelve months, which is 28.0% of revenue.
The tension in this report sits exactly between those two metrics. Retention of 117% that is rising, alongside ARR that missed - that says existing customers are expanding, but not at the pace the company planned, and that sales cycles lengthened.
This is a problem of pace, not of churn. A company losing customers looks entirely different on that line.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This report is a clean case of a company choosing which number to defend.
Revenue landed in the range, profitability beat it, and only ARR missed - and it is precisely ARR that was cut for the full year while profitability was raised. In a subscription model that is not a neutral choice. Recurring revenue is the asset; margin is the result of spending decisions. A margin can be improved in one quarter, and ARR cannot be built in one.
And so the number I take from this report is the $15 million that came off the year-end ARR target, not the $4 million that was added to the profit target. The first moves the starting point of 2027; the second ends in December.
And what I do credit management with: the explanation was specific. Not "a challenging environment" but longer sales cycles and less expansion than expected from Inseyets conversions. A specific explanation can be checked next quarter, and that is exactly the difference between a release you can follow and one you cannot.
And what I would watch from here: third quarter guidance promises a jump of about 37% in adjusted EBITDA against revenue growth of about 12%. That is a promise that is easy to measure. And alongside it - whether the retention rate of 117% keeps rising or starts to fall. Retention that begins falling after a guidance cut is an entirely different story from the one we read today.
(An important note: this is my personal opinion only, and nothing here is a recommendation to take any action.)
