Cellebrite (CLBT) Q3 2025: Cloud ARR Triples Pace, Guardian Adoption Doubles, AI Expansion Set for 2026
Cellebrite’s third quarter showcased a multi-pronged growth engine, with cloud ARR outpacing the core, Guardian usage doubling, and U.S. Federal demand rebounding. Strategic focus on AI-powered investigations and defense sector penetration positions the company for accelerated growth in 2026, as management signals increasing conviction in a top-line reacceleration.
Summary
- Cloud and SaaS Momentum: Guardian’s customer base more than doubled, with ARR growing over 100% for a fifth straight quarter.
- Federal and Defense Tailwinds: U.S. Federal returned to growth, and European defense saw major pipeline expansion.
- AI and Platform Expansion: Guardian Investigate’s 2026 launch and Carilium integration underpin management’s confidence in accelerating growth.
Performance Analysis
Cellebrite delivered balanced growth in Q3, with annual recurring revenue (ARR) up 19% year-over-year to $440 million and subscription revenue advancing 21%. The Americas contributed 55% of total ARR, led by robust performance in U.S. state and local government and Latin America, while EMEA and Asia Pacific represented 33% and 12% respectively. Cloud and SaaS offerings were the clear growth leaders: ARR from these solutions expanded at three times the company-wide rate, driven by rapid adoption of Guardian, Cellebrite’s cloud-native digital evidence management platform. Guardian’s ARR grew more than 100% for the fifth consecutive quarter, and its customer count more than doubled year-over-year.
Profitability also improved, with adjusted EBITDA up 20% and margin expanding to 29.9%, reflecting disciplined hiring and operational leverage. Free cash flow reached $30 million for the quarter, with trailing 12-month margin at 31%. Management raised full-year adjusted EBITDA guidance, citing strong execution and capital discipline.
- Cloud-Driven Upsell: Cloud ARR growth outpaced total ARR, signaling effective cross-sell and migration of legacy customers.
- Federal Rebound: U.S. Federal segment returned to growth, aided by strategic client wins and increased cloud adoption.
- Defense and Intelligence Expansion: European D&I pipeline now dominates Q4’s largest deal prospects, reflecting the sector’s digital transformation.
Operationally, the business is scaling with efficiency, as AI-driven automation and targeted hiring support margin expansion even as innovation ramps up ahead of Guardian Investigate’s 2026 release.
Executive Commentary
"ARR grew 19% for the 12-month period. Subscription revenue grew 21%, led by strong performance in our U.S. state and local segment and our Latin America region. Adjusted EBITDA exceeded expectations, growing 20% year on year with margin expansion of 60 basis points. We continue to tune our business to optimize top line growth while driving increased scale and operating efficiency to deliver meaningful levels of profitability and a very healthy free cash flow."
Tom Hogan, Chief Executive Officer
"ARR grew 19% to $440 million. Sequentially, ARR increased 5%, which is a healthy improvement from our sequential ARR growth rates in Q1 and Q2. The year-over-year increase reflects increased spending by our existing customers. The Americas represented 55% of total ARR, while EMEA represented 33%, and Asia Pacific represented 12%. In terms of growth rates by geography, the Americas grew 21%, with our U.S. state and local government and Latin America teams leading the way."
David Barter, Chief Financial Officer
Strategic Positioning
1. Cloud and SaaS-First Transformation
Cellebrite’s strategic pivot to cloud and SaaS is gaining traction, with Guardian emerging as the industry’s standard for digital evidence management. Guardian’s ARR growth outpaces the core, and the upcoming Guardian Investigate, an AI-powered investigation platform, aims to redefine case management and analytics. Management noted that “everything new that we’re doing is in the cloud,” underlining a product roadmap centered on cloud-native, AI-enabled workflows.
2. U.S. Federal and Defense Sector Penetration
Federal and defense are becoming core growth levers: The U.S. Federal segment returned to growth after a challenging first half, with “marquee” client expansions and increased cloud adoption. Management expects a “resurgence of growth” in 2026, aided by FedRAMP authorization and the Carilium acquisition, which brings ARM-based virtualization for cyber defense. European defense and intelligence (D&I) now represent the largest pipeline deals for Q4, reflecting rising digital threats and NATO spending commitments.
3. AI Innovation and Platform Synergy
The company is doubling down on AI innovation, with Guardian Investigate set to launch in early 2026. This SaaS solution will unify multi-source data ingestion, AI-driven insights, and secure collaboration, extending Cellebrite’s reach from forensics examiners to detectives and analysts. Pathfinder, the on-prem analytics engine, and Guardian Investigate will be complementary, enabling cross-sell and multi-product adoption. AI also underpins internal automation, supporting margin expansion and disciplined headcount growth.
4. Upsell, Cross-Sell, and TAM Expansion
Conversion to Insights, Cellebrite’s advanced forensics suite, reached 47% of the installed base, up from 20% at the start of the year, on track to meet or exceed the 50% target. This unlocks upsell opportunities into Guardian and Pathfinder, while automation and workflow tools break the legacy link between operator count and license sales, increasing unit growth potential. Carilium expands total addressable market (TAM) in both public and private sectors, with new use cases emerging in defense and enterprise.
Key Considerations
Cellebrite’s Q3 results reflect a business at the intersection of digital transformation, public safety, and AI innovation. The company’s ability to cross-sell cloud, upsell advanced analytics, and penetrate defense and federal sectors is accelerating, while operational discipline sustains high profitability. The upcoming launch of Guardian Investigate and Carilium integration are poised to expand both market reach and product depth in 2026.
Key Considerations:
- Cloud Migration as a Growth Engine: Guardian’s rapid adoption and ARR growth validate the pivot to SaaS and cloud-first workflows.
- Federal and Defense as Durable Demand Drivers: U.S. Federal and European D&I segments are rebounding, with large, multi-year contracts and pipeline visibility.
- AI-Driven Differentiation: Guardian Investigate and automation initiatives are set to increase both product stickiness and margin leverage.
- Upsell and Cross-Sell Opportunity: Insights conversions and automation tools enable higher license density and expand wallet share with existing clients.
- Capital Allocation Flexibility: A nearly $600 million cash balance post-Carilium provides ample room for M&A and strategic investments.
Risks
Federal spending timing and budget cycles remain a source of volatility, as seen in management’s cautious Q4 outlook. Carilium’s CFIUS review, though near completion, is not risk-free. The overhang from Sun Corporation’s large ownership stake could pressure the stock if not reduced in a structured manner. Competitive threats are muted due to high entry barriers, but rapid change in AI or regulatory environments could alter the landscape.
Forward Outlook
For Q4, Cellebrite guided to:
- ARR growth in the mid-single digits sequentially
- Revenue between $123 and $128 million
- Adjusted EBITDA of $35 to $38 million (28% to 30% margin)
For full-year 2025, management raised the midpoint of its revenue outlook to $470 to $475 million and increased adjusted EBITDA guidance to $124 to $127 million (26% to 27% margin). Free cash flow margin is expected to reach 30%. Management emphasized a prudent approach to 2026 guidance, with confidence in accelerating ARR growth supported by contract renewals, cross-sell, and Carilium integration, but will provide formal targets in February.
- Visibility into federal and D&I pipelines supports optimism for a 2026 top-line reacceleration
- AI investments and automation will drive further margin gains and operating leverage
Takeaways
Cellebrite’s Q3 results confirm the company’s transition from forensics tools provider to a cloud-native, AI-driven investigations platform, with recurring revenue, profitability, and pipeline visibility all moving in the right direction.
- Cloud and AI as Multipliers: The company’s cloud ARR and Guardian adoption are outpacing the legacy business, with AI expansion set to drive further differentiation and upsell in 2026.
- Federal and Defense Momentum: The return to growth in U.S. Federal and pipeline strength in European defense signal durable demand, with Carilium poised to expand TAM and product fit.
- 2026 Inflection Watch: Investors should focus on the February guidance for formal ARR acceleration targets, Carilium integration progress, and the ramp of Guardian Investigate as key catalysts.
Conclusion
Cellebrite’s disciplined execution, cloud and AI innovation, and deepening penetration in mission-critical sectors set the stage for accelerated growth in 2026. The business is leveraging high-margin SaaS, automation, and a robust balance sheet to expand both market share and profitability, with several catalysts on the horizon.
Industry Read-Through
Cellebrite’s results reinforce the growing demand for digital forensics, cloud-native evidence management, and AI-powered investigations across law enforcement, defense, and enterprise segments. The rapid adoption of Guardian and the expansion into D&I highlight a broader trend of digital transformation in public safety and national security. Other vendors in digital investigations, cybersecurity, and AI-enabled analytics should note the increasing importance of cloud platforms, FedRAMP certifications, and integrated workflow solutions to win large, multi-year contracts and defend against new entrants. AI-driven automation and workflow tools are now table stakes for efficiency and scale, with customer intimacy and brand trust serving as durable moats in high-stakes, regulated markets.