Cellebrite DI Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2023

There are 9 speakers on the call.

Operator

Welcome to the Cellebrite First Quarter 2023 Financial Results Conference Call. At this time, all participants have been placed on a listen only mode and the floor will be open for your questions following the presentation. You may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, We ask that you pick up your handset for best sound quality. I would now like to turn the call over to your first speaker today, Mr.

Operator

Andrew Kramer. Mr. Kramer, the floor is yours.

Speaker 1

Thank you, Shelby. Good morning, everybody. Cellebrite's Q1 2023 Financial Results Conference Call. Joining me today are Yossi Carmel, Cellebrite's CEO and Donna Gerner, Cellebrite's CFO. There is a slide presentation that accompanies our prepared remarks and you can advance the slides in the webcast viewer to follow our commentary.

Speaker 1

We will be sure to call out the slide number we are referring to in our remarks. This call is being recorded and a replay of the recording will be made available on our website shortly after the call. Let's start with slide number 2. A copy of today's press release and financial statements, including the GAAP to non GAAP reconciliations, on the slide presentation, all of that is available on the company's Investor Relations website at investors. Cellebrite.com.

Speaker 1

Please note that the quarterly financial tables and supplemental data for the Q1 and each quarter for the past 2 years will be posted to our Investor Relations website after this call concludes. Also Unless stated otherwise, our Q1 2023 financial metrics as well as the financial metrics provided in our outlook that will be discussed on today's conference on a non GAAP basis only. All historical comparisons are with the Q1 of 2022 unless otherwise noted. In addition, please note that the statements made during this call that are not statements of historical facts constitute forward looking statements. All forward looking statements are subject to risks and uncertainties and other factors that could cause matters expressed or implied by those forward looking statements not to occur.

Speaker 1

That could also cause the actual results to differ materially from historical results and or from forecasts. Some of these forward looking statements are discussed under the heading Risk Factors and elsewhere in the company's annual report on Form 20 F filed with the SEC on April 27, 2023. The company does not undertake to update any forward looking statements to reflect future events or circumstances. Slide number 3 provides the agenda for today's call. As you will hear, we are pleased with our Q1 financial performance and strategic progress and we are focused on delivering on our full year 2023 targets.

Speaker 1

And with that said, I'll now turn the call over to Yossi Carmel, Cellebrite's CEO.

Speaker 2

Thank you, Andy, and thank you all for joining us today. As reflected on Slide 5, Sutterby's first quarter results and KPIs demonstrate a strong start to 2023. The Q1 of 2023 was also marked by Cellebrite's continued progress with key strategic initiatives aimed at advancing innovation and expanding our customers' relationship. It is really rewarding to see customers increasingly turn to Cellebrite for powerful digital intelligence software solutions that will help them modernize their investigative workflow. This is translating into higher usage for our collect and review solutions and increasing traction for additional growth engines like our investigative analytics and our case evidence management offerings, All of which is helping grow wallet share within our installed customer base and capture new logos.

Speaker 2

As a result, We move forward with a solid momentum in a healthy marketplace. Before I share some observations about our market positioning, on the quarter, the market environment and our outlook for the remainder of 2023, I will briefly review our Q1 results and other select metrics. The Q1 revenue of $71,200,000 grew 14% over the prior year with subscription software revenue growing 27%. Our ARR grew 30% to $261,000,000 We delivered another quarter with dollar based NRR greater than 120%. We closed 21 large deals, each valued at greater than $500,000 We reported Q1 adjusted EBITDA of $7,300,000 for a margin of 10% and non GAAP EPS of $0.03 and we generated more than $12,000,000 in cash from operations and ended Q1 with cash and investment totaling just over 2 $21,000,000 and no outstanding debt.

Speaker 2

Turning to Slide 6. Elevate is recognized by public and private sector customers, industry experts and investors as a market leader in digital intelligence software solutions. The cornerstone of our business continues to be our collector review offerings that are trusted by customers around the globe to locally extract, decode and review digital evidence. Now these offerings, which represent more than 80% of Q1 2023 revenue, are augmented by our investigative analytics, in case and evidence management solutions, which are still at the early stage of customers' adoption. In addition to these offerings, We deliver high value professional services, including training, certification and advanced services that customers use to reduce their backlog of devices by outsourcing digital evidence collection to our experts.

Speaker 2

During the Q1, we executed well on our product roadmaps and go to market initiatives. In collective review, the substantial investments we've made in recent years to expand our mobile research Capabilities continue to pay off. Earlier this spring, we delivered an industry first capability on our premium solution for the latest iPhone and iOS versions. Our leadership in iPhone and iOS is complemented by our extensive coverage of Android based smartphones, which command more than 70% of the global smartphone market. Looking ahead, We're also excited about our near term plans to further elevate the value proposition of YouFED, our basic collective review offering by tens of thousands of examiners around the globe.

Speaker 2

In terms of other notable development progress, We continue to enhance our physical analyzer and Pathfinder investigative analytics by leveraging our ongoing investment in artificial intelligence to further differentiate these offerings. These solutions enable law enforcement professionals to quickly leverage powerful, timely insights into digital evidence, automate time consuming often manual tasks and advance investigation faster and more efficiently. We've also continued in Advanced Guardian, our SaaS based platform for case management and evidence management. From a go to market perspective, we are gaining solid momentum. The actions we took last year to on the business and building a stronger high quality pipeline of opportunities.

Speaker 2

This is reflected in several ways. Our first quarter NRR of 128% was the 17th consecutive quarter above 120%. Revenue in the Americas grew 20%, while revenue in EMEA increased 14%, its best quarter of top line expansion in the past year. Our flagship Collect and Review suite of solutions, NewFED, Premium and Physical Analyzer were at the foundation of the vast majority on our Q1 large deals as expected. 2 thirds of these large deals included more than our mobile data forensic solutions, on the call, such as computer, cloud data collection, Pathfinder and Guardian as well as training and advanced services.

Speaker 2

We're also pleased to note that our revenue growth rate within the private sector has accelerated into the high teens. We are moving forward focused on driving further enterprise expansion through our direct sales, our service provider channels and other high value partnerships. Our ARR growth of 30% primarily reflects our success in expanding wallet share with existing customers. Geographically, we continue to produce significant ARR expansion in the Americas, led by continued strength in our U. S.

Speaker 2

In the state and local government sales group. We achieved this ARR growth even as we have stopped our new sales activities in dozens of countries as part of our ongoing commitment to operate our business with the highest ethical and professional standards. Dana will We'll share additional insights on this topic in a moment. Moving to Slide 7, I will highlight several Q1 deals that best demonstrate our R and D and go to market progress and In Latin America, we are helping a large national agency evolve and upgrade their mode of operation in the face of more crime that involves digital evidence, including financial crimes. This customer is now benefiting from extended premium licensing as well as Guardian and Pathfinder.

Speaker 2

Just as noteworthy, this is the 1st customer in this region to use our digital intelligence offering that integrates cryptocurrency data and insights. With this deal, this customer's ARR increased substantially by 13 times to $1,600,000 In our USA state local government accounts, there were 2 notable Q1 wins that showcase our ongoing success in growing our wallet share with police departments serving midsized cities. Now in both cities, violent crime, especially homicides, have been on the rise. So to help law enforcement move faster, Both customers not only added premium, but they also began deploying Pathfinder to accelerate the investigations and Guardian to securely share digital evidence among examiners, investigators and prosecutors. ARR for one of these customers increased by 4x to nearly $600,600,000 and the other customer is also a great example of our success in harvesting smaller long tail prime accounts.

Speaker 2

Now with this deal in place, ARR for this customer increased by over 10 times to just under $300,000 we were also pleased to see that a specialist intelligence agency in Western Europe extended its use of our premium solution nationwide, while also renewing the licenses for our other collection review to accelerate their cyber investigation and safeguard their citizens. As a result, these customers' ARR increased by over 60% to $1,200,000 And last, in the private sector, There were 2 notable deals in Q1 with our service provider partners, who typically generate approximately half of our quarterly enterprise revenue. 1 service provider in a Central European country made its initial purchase of Mobile Elite, our on prem enterprise solution for collecting digital evidence from advanced smartphones. Another service provider's West Coast Office mainly first purchase of our Endpoint Inspector, software for remote data collection. We believe that the breadth and depth of our product portfolio for the private sector, it leaves us well positioned to continue expanding our service provider relationship going forward.

Speaker 2

So turning to Slide 8. We move into the 2nd quarter with solid momentum in a healthy placed that is benefiting from multiple tailwinds. With 90% of criminal cases involving a digital element, Law enforcement agencies are increasingly recognizing that they must modernize their investigative workflow and evolve their current mode of operation. Our own industry research, from last late last year, adds further support to this, and here are some additional facts. Most law enforcement professionals and prosecutors believe that digital evidence is more important than physical evidence and DNA to successfully Approximately 2 thirds of all phones entering the lab are locked.

Speaker 2

Nearly 75% of agency managers agree that there is a growing technology skill gap in policing, making it even tougher for police forces to collect, manage, analyze, store and use the digital evidence required to win convictions. And last, as it relates to digital transformation, almost half of the police chiefs and agency managers describe current strategies as poor to mediocre. Slide 9 addresses our outlook. More specifically, based on our performance to date and the opportunities we see going forward, we believe we are on a track to deliver on our 2023 financial targets. I would like to close by reiterating that Celine Bright made important strategic progress during the Q1 and executed well against top priorities that we outlined on our last quarter's call.

Speaker 2

Now these include bringing impactful innovation to the marketplace, extending our collective leadership and broadening our reach into new buying centers that can benefit from our high value investigative analytics and powerful case management on solutions. Our team remains very enthusiastic about the company's prospects in 2023 and beyond, and we work together to deliver powerful digital intelligent solutions that will help our customers around the globe to protect and save lives, accelerate justice and ensure data privacy. And with that said, I will ask Dana to begin her financial review. Dana, please?

Speaker 3

Thank you, Yossi. Let's begin a review on Slide 11. Total revenue of $71,200,000 for the 1st quarter was up 14%. This was driven primarily by 27% growth in subscription revenue. On 77% 1 year ago.

Speaker 3

Slide 12 details our ARR growth, which is an important forward looking KPI for to celebrate sales momentum and the trajectory of future revenue. As Yossi noted, ARR grew 30% year on year, reaching $261,000,000 at the end of Q1, primarily as a result of continued expansion with existing customers. Within this category, we produced strong ARR growth for our collect and review solutions, mainly due to further penetration of premium into our installed base. This expansion is augmented by faster growth from our Pathfinder Investigative Analytics and Guardian Case Management on a much smaller basis. And I'd like to briefly elaborate on churn, which reflects the impact of license reductions and cancellations.

Speaker 3

Churn was 10% in the Q1, up to approximately 2 percentage point of the churn is directly tied to erosion from customers in countries where we have discontinued new sales activities and are no longer pursuing license renewals. We anticipate that the impact from voluntary churn will likely remain at the current levels throughout 2023 in gradually lessened as we move into the latter part of 2024. Slide 13 details the historical trends for our non GAAP gross margins and non GAAP operating expenses, which exclude share based compensation, amortization of intangible assets and acquisition related expenses. Our Q1 2023 Gross margins was 83.1%, which was up slightly from 82.8% in the same period 1 year ago. Our gross margins performance in Q1 reflects the positive impact from the sustained growth we have delivered in higher margin software sales.

Speaker 3

In terms of operating expenses. 1st quarter operating expenses were $53,500,000 which reflects disciplined spending, lower headcount on our personnel costs and to a lesser extent favorable changes in foreign exchange rates. From the same period last year. We expect headcount to return to year end 2022 levels over the next quarter or 2. Turning to Slide 14, our adjusted EBITDA in the quarter was $7,300,000 or 10.3 percent on a margin basis.

Speaker 3

This was due to the combination of a strong revenue performance and disciplined spending. Those same factors contributed to non GAAP operating on the income of $5,700,000 Non GAAP net income in Q1 was $6,900,000 and non GAAP fully diluted EPS was

Speaker 2

0 point 0

Speaker 3

$3 I am pleased with our cash generation to start the year. We generated cash from operations in the Q1 of $12,500,000 due primarily to our strong operating results and excellent collection efforts. We finished the Q1 with with $221,200,000 of cash, cash equivalents and investments, up $15,400,000 from the end of 2022, despite meaningful cash outflows associated with annual bonus payments, 4th quarter commissions and $6,000,000 for the final payment associated with in the company's acquisition of Degbet Technologies in early 2020. Let's move to Slide 15. Based on the results thus far and the opportunities ahead of us, we are on track to achieve our original financial outlook for 2023 and reiterate our full year 2023 guidance, which is displayed on this slide.

Speaker 3

In terms of ARR, We expect ongoing convergence between our subscription revenue and our ALL growth rate as we move through the rest of the year. On a related note, we expect that our total revenue growth rate will continue to raise our subscription revenues growth rate due to slower growth in professional services and and expect a decline for other non recurring revenue as our perpetual license revenue has now reached relatively insignificant levels. In closing and to recap, Cerebyte is off to a strong start in 2023. We have continued to deliver compelling innovation to the marketplace, which has been critical for sustaining our commercial progress in expanding water share within existing accounts and winning new customers. We also demonstrated our commitment to convert storage revenue growth into improved profitability even as we made meaningful strategic investments to expand our business and deliver value to customers.

Speaker 3

While it is still early in the year, We move forward on track to achieve our 2023 financial targets. We are confident that executing on our plans over the coming quarters will drive value creation for shareholders, customers, partners and employees. That concludes our prepared remarks. And I'll return the call back to our operator for Q and A.

Operator

Thank you. The floor is now open for questions. When posing your questions to provide optimal sound quality. Thank you. We'll take our first question from Jonathan Ho with William Blair.

Speaker 4

Hi, good morning and congratulations on the strong results. Just wanted to, I guess, get a little bit more color on the decision to voluntarily stop selling in some regions. Could you maybe give us a sense of how large the customer base is in these areas? And maybe what changed to cause you to stop selling in these areas now?

Speaker 2

Shall I take it, Donna? Please. So first of all, I would say nothing changed in the base that all the elements of making sure that The technology, which is aimed to do good, goes to the right places and being used in the right manner, is part of our business for years by now. And obviously, human rights and data security and data privacy are important to us. Just to maybe refresh 2021, we formed our Ethics and Integrity Committee, which advised the Board Regarding that policy, so that was basically something that even strengths our existing compliance and ethical practices within the company.

Speaker 2

So within that part, As we did over the last past years where we stopped new sales activities in dozens of countries, we decided to add on additional countries. As part of that ongoing effort, I would say to, 1st of all, make sure we have the right operation That we focus on the right areas where we can be sure that the way our products are being operated are in the right And that means, Jonathan, basically, we are getting we always been cautious about that. We are getting better with that. And within time, based on our ongoing, ongoing ethics compliance, we are upgrading our activity in that respect blocking or getting out of additional countries. Does it answer your question?

Speaker 4

It does. I mean, the first part of the question was sort of the size of the customer bases in these countries that you're exiting.

Speaker 3

Maybe I'll take it.

Speaker 2

Yes. Go ahead, Donna.

Speaker 3

So in principle, we are really looking at a very, very long tail Okay. Customer base in these regions, we've done very insignificant business. So this will does not have a substantial impact on our revenue growth or ARR growth as we As I alluded to in my part, and we expect it to be almost not within a year and a half.

Speaker 4

Got it. Got it. And then you mentioned AI as part of the enhancements that you're putting into your products. Can you give us a little bit more detail in terms of what that opportunity looks like longer term? And can that maybe Change either the competitive sort of win rates or drive additional upsell opportunities.

Speaker 4

Just I want to get a little bit more detail around that AI opportunity.

Speaker 2

Yes, with pleasure and really exciting in that context. First of all, we invest in AI, as you probably remember, and use it as part of the technological That we put into our investigative analytics pathfinder and also in the PA. Look, We continue to invest here because we see AI capabilities, I would say, on physical analyzer and Pathfinder as something that enable our customers to use it and quickly leverage Insights, which is, by the way, classic, helpful for digital evidence and especially in the investigative world. Because as we move forward with AI, we will see that it will play a bigger role and an important role. And you can think about it like that, that in the investigative world, what we can help and offer is basically, add with technology, improvement of mode of operation for the investigators around creating investigative scenarios and help with classifications of media, location, images, etcetera, etcetera.

Speaker 2

As a result, as you probably understand, that will to be a differentiator, creates obviously increased business opportunities into the future and especially in those two areas that I've mentioned, one collective review with Physical Analyzer and second, the ongoing interest which is related to Pathfinder Investigative Analytics. Definitely a technological benefit with an ongoing, ongoing business opportunity for us.

Speaker 4

Fantastic. Thank you.

Operator

And we'll take our next question from Shaul Eyal with TD Cowen.

Speaker 5

Thank you. Good afternoon, Yossi, Donna, Andy. Congrats. Good to see the ongoing stability in the business, great progress also on the governance front. My first question Yossi is actually on the pipeline.

Speaker 5

How would you characterize the pipeline? Is it close to record levels? Also did most of the slippage for the past for the year. Did that already come back?

Speaker 2

I would say the following. First of all, it's especially as we look forward even beyond Q2 to Q3 and Q4. And I would even say that in the perspective of 2023 and beyond, we feel very confident right now in something that I can say is scalable, can grow as we expected And relying among others on a very stable pipeline. When it comes to what we were facing in the past, I said all the time the market is healthy and we had to upgrade and correct some elements which are related to our go to market. We did in the USA, in EMEA, and we feel, I would say, also very comfortable in the combination between the existing pipeline, the pipeline health and our ability to execute with our go to market organization.

Speaker 5

Understood. Understood. Thank you for this color. And my second question, so Magnet Forensics, as we all know, I was married with Grayship, Toma Bravo pursued both these transactions. I know it could be early days, Yossi, but have you witnessed any change within the competitive landscape?

Speaker 2

No major change in the competitive landscape, specifically to Magnet and Grayshifts as spoken last quarter. 1, that merge anticipated actually right now practical happening merge is Good for the market. It shows the attractiveness of the market. It was not a surprise for us. Those entities were as stand alone collaborating with each other at the past.

Speaker 2

I also say that the merge reflects actually the value of CelebRite because it was, among others, based on the importance of the mobile as part of the entire scheme. Back to the question about the changes, so no changes not there and not in general. We continue to see smaller competitors From time to time that attempt to match elements of our product strategy, our investment in innovation, I would say, The strong customer relationship that we have and our ability to scale our position, we need to continue with our plan and we believe that 2023 will be an important progress in that respect with With our competition, we need to do our thing.

Speaker 5

Understood. Thank you for that. Congrats.

Speaker 1

Thank you. Next question, operator.

Operator

And we'll take our next question from Kyle Liani with Bank of America.

Speaker 1

Hi, good morning.

Speaker 6

Private sector, you mentioned new sales initiative And growth in the private sector. Can you give us a little bit more details, first of all, on your efforts to drive growth and opportunities, etcetera?

Speaker 2

So obviously, look, private sector I I would say private sector revenue in CelebRite was and still slightly below the 10% of our total We believe that the current growth rates is substantially with good potential, and we have the ability to accelerate based on the current offering that we have. Again, it's Collection, it's remote collection and there is also some moves that we are doing in order to collaborate with Additional partners within the industry. I would say Maybe a little bit about what drives deals over there and the deal size. So in the public sector, by the way, similar to the in the private similar to the public, deal size for the private sector customers is a function of products which are needed and the numbers of licenses. And even, I would say, larger corporate customers will generally require Fireless licenses for their IT and legal teams involved in conducting investigation.

Speaker 2

So the largest enterprise are staff similar to the Forensic Lab or I would say by the small to midsized customer in the public. And as such, what I want to say with that, you will continue to see weak, we'll continue to see the growth. It's not the pace of growth That we see in the public, but one, we are satisfied with what we see. I also mentioned that we upgraded the sales team, sales leadership over there, into the future as long as we operate organically. But it's good because the entire pie grows and The pie of the private sector as part of our activity grows as well.

Speaker 7

Got it.

Speaker 6

I have a second question with your permission. You talked about in the last two quarters, you talked about deal slippage. This quarter is very strong. Are you still seeing slippage of deals? And can you speak generally about how macroeconomics conditions are impacting projects and scrutiny of projects?

Speaker 2

I'll start with the second part. We do not see any macroeconomics elements which are Disturbing the business at the moment. I would say on the contrary, we spoke in the past about fear from Defunding, now the context is between funding to refunding of police. Slippery deals were mentioned last year, and it was in the context of our ability to close and bring it to the end in timely manner, especially by large deals, which Tends to be lumpy. I believe that right now I don't believe.

Speaker 2

I'm sure that right now as we look at it, we're in a much better shape. Maybe to emphasize as last statement, there is no dependency in Cellebrite on that big large deal or that big project. We have a very good balance, and it's very good for us in terms of business or risk management in business. There are increasing there is an increasing number of large deals, but those are not mega sized deals which create dependency on the entire quarter. And They improved side by side with our ability to continue growing with this transactional business by those thousands of long tail prime customers in the state and local government.

Speaker 2

So less lumpiness, diversified environment And small dependencies on mega large deals in order to meet the targets. We're in a good shape there.

Speaker 6

Great. Thank you.

Operator

And we'll take our next question from by Doug Bruel with JPMorgan.

Speaker 6

Hey, good morning and thanks for taking my question. So looking at your ARR slide and seeing that growth over the past year really driven almost entirely by expansion revenue. What Products and services are you seeing the most strengthened for that expansion component?

Speaker 3

So maybe I'll take it, Yossi. Predominantly, from a

Speaker 2

on the spectrum

Speaker 3

of the collection review being our major installed base is driving most of the growth. We saw the penetration of our advanced collection capabilities in the shape of premium solutions. We do see faster ARR growth for Investigative Analytics and the Guardian solutions. But as they are coming from a smaller basis, the impact on the total dollar amount and the mix and the average ARR growth is marginal currently.

Speaker 6

Great. That's all for me. Thank you.

Speaker 4

Welcome.

Operator

And we'll take our next question from Jamie Shelton with Deutsche Bank.

Speaker 7

Good morning and thank you for taking my question and congrats on the solid execution. It's great to see the launch of Pathfinder X. You've touched on it briefly, but if you could talk to recent Pathfinder momentum as well as any additional Color around contribution and growth today and I guess more importantly, where you think this could go over the next few years? And I've got a quick follow-up. Thank you.

Speaker 2

Thank you, and thank you for the question. Usana, I will take it maybe at least for a start. Look, although Pathfinder has been available for several years, It is only with the past that would take 2 years that the product has achieved a level of functionality to gain traction within customers. And we've closed dozens of Pathfinder deals over the past year as we, I would say, cross sell and up sell This offering in our installed base. And in Q1, by the way, we highlighted 3 customers deal that included Path Pathfinder positions Cellebrite very strongly in almost some kind of SolSoft's offering when it comes to the investigative world.

Speaker 2

It is a BI, which is dedicated to the way an investigator operates. It is also a great opportunity to take the especially in unique way data is being collected with our collecting review and then analyze that large amount of data in order to get to the evidence as quick as possible. Now it will we anticipate that it will boom in the future in a positive context, a significant growth. It is involved selling that is involved with longer sales cycle. It is involved with changing sometimes the mode of operation of the customer.

Speaker 2

But as I look at it, we continue to look at it as a significant growth opportunity for the investigative segment and definitely a relative advantage for us.

Speaker 7

Brilliant. And just a quick follow-up. Can you provide us what percent of your UCEDD base is now connected to Premium Enterprise?

Speaker 3

I'll take it. So I would say that we are at the mid teens in average of connected usage to premium enterprise.

Speaker 7

Thank you, Anstead.

Speaker 2

Welcome.

Operator

We'll take our next question from Louis DiPalma with William Blair.

Speaker 8

Yossi, Donna and Andy, good morning. Good morning.

Speaker 4

Good morning.

Speaker 8

Following on my colleague Jonathan's question, is there the potential for you to forge commercial partnerships with some of the generative AI vendors like OpenAI or Google to integrate those systems with your physical analyzer and perhaps like upsell that like

Speaker 2

to remember that we are dealing with investigators and we are dealing with investigative data. And it is important for us also to, let's say, to keep the knowledge in doubt and make sure that we are giving Something which is reliable, closed, contained and stable enough. The investment that we do in AI has been primarily focused on developing our machine learning models, including those for, I would say, media And topic classification. And obviously, we'll continue to explore ways that, I would say, open source based AR models complement our own capabilities and let's say further enhance and support the solution. So yes for the auction, but we'll see into the future.

Speaker 8

Great. That makes total sense. And another question, many vendors in public safety have implemented price increases over the past year in this inflationary environment. Did you increase the pricing on any of your key products? Or is there potential for you To do so in the future to add to the existing core growth?

Speaker 2

So, first of all, yes, there is an option for an ongoing price increase. In addition, we actually just now increased the prices in the public sector for our collective review and investigative analytics in the beginning of Q2. So the activity in Q1 Didn't basically was not affected by that. The statement is, by the way, valid mainly for the U. S, for the Americas, In the beginning of the year, we did some modifications in the pricing to Europe based on the currency exchange currency rates.

Speaker 2

Into the future and since you are talking to a company which is Pacing its growth mainly on growing within the existing accounts, existing logos and focusing on strategic mid high and the large federals, we intend or we think that we can see continuous price increasing for the value that we bring into our solutions. So it is also part of the strategy for the future to come. And to sum it up, so yes and yes.

Speaker 8

Thanks, Yossi and thanks, everyone.

Speaker 6

On the call.

Operator

This concludes the Q and A portion of today's call. I would now like to turn the floor over to Cellebrite's CEO, Yossi Carmel for additional or closing remarks.

Speaker 2

Okay. So thank you again everyone for joining us. Thank you for the questions. And thank you especially for the Cellebrite employees for a great Q1 and good luck to us in the rest for the rest of the year. Thank you.

Speaker 2

Have a great day.

Operator

Thank you. This concludes today's Cellebrite First Quarter 2023 Financial Results Conference Call. Please disconnect your line at this time and have a wonderful day.

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