Cellebrite shares surged 22% in after-hours trading Wednesday after the digital investigation solutions provider reported third-quarter earnings that significantly exceeded analyst expectations, driven by strong subscription revenue growth.

The company reported adjusted earnings per share of $0.14 for the third quarter, handily beating the analyst consensus of $0.09. Revenue reached $126 million, surpassing the $122.98 million estimate and representing an 18% increase YoY. Subscription revenue, which makes up the bulk of the company’s business, grew 21% YoY to $112.7 million.

"Cellebrite once again delivered a balanced and solid performance," said Thomas E. Hogan, Cellebrite’s CEO. "We exceeded the high end of our prior adjusted EBITDA guidance with revenue at the high end of expectations and ARR at the midpoint."

The company’s Annual Recurring Revenue (ARR) reached $439.8 million, up 19% YoY, with a recurring revenue dollar-based net retention rate of 117%. Adjusted EBITDA came in at $37.7 million, representing a margin of 29.9%.

For the fourth quarter, Cellebrite expects revenue between $123 million and $128 million, with the midpoint of $125.5 million aligning with the analyst consensus of $125 million. The company also updated its full-year 2025 guidance, projecting revenue between $470 million and $475 million, representing 17-18% annual growth.

CFO David Barter noted, "Strong demand from customers within our U.S. state and local, and Latin America segments helped drive 21% growth in total subscription-based revenue." He added that the company expects a free cash flow margin of approximately 30% for the full year.

Cellebrite highlighted improved performance in its U.S. Federal business, which delivered "meaningful expansion of business with several marquee clients." Management expressed optimism about renewed growth in this sector in 2026 as government budgeting improves and the company achieves full cloud authorization through its sponsorship with the Department of Justice.

The company’s outlook does not incorporate any anticipated contribution from its pending acquisition of Corellium, Inc., which is expected to close later this quarter.