This will be a short update on Cellebrite, my smallest position. I’m a bit stressed lately, so I will keep this rather short and keyword-like. Nonetheless, I want to talk about this troubled investment. Firstly, a bit on risk management: I struggled to build meaningful conviction in Cellebrite since I started to own it. At first I made it too large of a position and trimmed it down to a normal position (7%ish) quickly. After refining my model I noticed that Cellebrite probably was my worst risk/reward situation prior to the crash, so I trimmed it aggressively to a 2% cost position (tiny for a 12 position portfolio). In hindsight that was a great decision, but one could ask if I could have also followed the story from the sideline instead. Anyway, it’s now a 1.3% position on current price. Here’s my last article on Cellebrite btw.
Cellebrite closed down 30% after earnings. There were a few reasons for this:
ARR missed bottom end due to delayed large transactions and procurement issues (foreign entity issue in US foreign entity permits (FEP) and EU privacy laws. Meaning they struggled with getting contracts going due to legal issues).
adjusted EBITDA guidance raised on disciplined cost management (the good part of the report).
Leadership Transition: Shiv Ramji appointed CEO effective immediately, accelerating a planned transition from Tom Hogan. Shiv brings a product-centric focus with expertise in scalable, cloud-native platforms and AI integration. Market hates this, as it seems rushed with a new insider in the company (joined in May 26) taking over.
FY26 guidance of ARR 14-16%, revenue 17-18% growth, adjusted EBITDA margin of 28%. This massively disappointed investors who expected an acceleration on the FEDramp certification allowing them to sell into US agencies of the highest security level.
balance sheet is strong despite $160 million M&A spend recently (another positive part).
On a good note growth product acceleration to 83% growth, representing 14% of sales. Part of the thesis is the cross-sell between insights customers and growth products. Since the report came out, they also reported that their Genesis AI offering (which has massive potential) is now available to the public. Maybe they are setting up a beat and raise scenario….but that was already an assumption for most previous quarters.
28% FCF margin are impacted by deal structures and collections, they say it is because they now get bigger deals which have longer closing times. SBC looks very ugly roughly doubling Y/Y, which I hate to see.
EU impact from freedom of information laws requiring data anonymization and sovereign storage, causing delays in cloud transitions (still 23% ARR growth).
Segment results:
Insights: Conversion progress strong with nearly 65% of installed base converted, but ARR uplift from pricing and footprint expansion lower than expected, especially in U.S. state and local government.
New Products: Guardian Investigate, Advanced Unlocks, and drone forensics contributed meaningfully in their first full quarter. Genesis launched late in Q2 with early adoption across U.S., U.K., Australia, and Europe.
FedRAMP Certification: Secured first major FedRAMP deal for Guardian with a U.S. federal customer, representing a significant multi-product, multi-million-dollar order.
Lots of talk about delayed revenue over 2 years is a pattern. At least 6 weeks of headwind from the procurement issue now. Recently I noticed a pattern in my losers: excuses for delayed revenue. The most striking examples where Napco Security talking about the incoming acceleration following the sunsetting of some radio generation, which didn’t happen for 4 quarters or so, RCI Hospitality talking about a liquor license for a full year just to give up on it afterwards or Cellebrite talking about growth acceleration for a damn long time (see the koyfin excerpt below).
“2026 is an execution reset year, not a reset of long-term growth potential” is a red flag.
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