Exhibit 99.1
CONSOLIDATED FINANCIAL STATEMENTS
CELLEBRITE DI LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL STATEMENT
AS OF JUNE 30, 2024
UNAUDITED
INDEX
F-1
Cellebrite DI Ltd. and its Subsidiaries
| INTERIM CONSOLIDATED BALANCE SHEETS |
| (U.S Dollars in thousands, except share and per share data) |
| June 30, | December 31, | |||||||||
| 2024 | 2023 | |||||||||
| Note | Unaudited | |||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | $ | ||||||||
| Short-term deposits | ||||||||||
| Marketable securities | 3 | |||||||||
| Trade receivables (net of allowance for credit losses of $ | ||||||||||
| Prepaid expenses and other current assets | ||||||||||
| Contract acquisition costs | ||||||||||
| Inventories | ||||||||||
| Total current assets | ||||||||||
| Non-current assets | ||||||||||
| Other non-current assets | ||||||||||
| Marketable securities | 3 | |||||||||
| Deferred tax assets, net | ||||||||||
| Property and equipment, net | ||||||||||
| Intangible assets, net | ||||||||||
| Goodwill | ||||||||||
| Operating lease right-of-use assets, net | 5 | |||||||||
| Total non-current assets | ||||||||||
| Total assets | $ | $ | ||||||||
| Liabilities and Shareholders’ (deficiency) equity | ||||||||||
| Current Liabilities | ||||||||||
| Trade payables | $ | $ | ||||||||
| Other accounts payable and accrued expenses | ||||||||||
| Deferred revenues | ||||||||||
| Operating lease liabilities | 5 | |||||||||
| Total current liabilities | ||||||||||
| Long-term liabilities | ||||||||||
| Other long-term liabilities | ||||||||||
| Deferred revenues | ||||||||||
| Restricted Sponsor Shares liability | 9 | |||||||||
| Price Adjustment Shares liability | 9 | |||||||||
| Warrant liability | 9 | |||||||||
| Operating lease liabilities | 5 | |||||||||
| Total long-term liabilities | ||||||||||
| Total liabilities | $ | $ | ||||||||
| Shareholders’ (deficiency) equity | 7 | |||||||||
| Share capital, NIS | ||||||||||
| Additional paid-in capital | ( | ) | ( | ) | ||||||
| Treasury share, NIS | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive income | ||||||||||
| Retained earnings | ||||||||||
| Total shareholders’ (deficiency) equity | ( | ) | ||||||||
| Total liabilities and shareholders’ (deficiency) equity | $ | $ | ||||||||
| *) |
F-2
| Cellebrite DI Ltd. and its Subsidiaries |
| INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) |
| (U.S Dollars in thousands, except share and per share data) |
| For the six months ended | ||||||||||
| June 30, | ||||||||||
| 2024 | 2023 | |||||||||
| Note | Unaudited | Unaudited | ||||||||
| Revenue: | 10 | |||||||||
| Subscription services | $ | $ | ||||||||
| Term-license | ||||||||||
| Total subscription | ||||||||||
| Other non-recurring | ||||||||||
| Professional services | ||||||||||
| Total revenue | ||||||||||
| Cost of revenue: | ||||||||||
| Subscription services | ||||||||||
| Term-license | ||||||||||
| Total subscription | ||||||||||
| Other non-recurring | ||||||||||
| Professional services | ||||||||||
| Total cost of revenue | ||||||||||
| Gross profit | $ | $ | ||||||||
| Operating expenses: | ||||||||||
| Research and development | ||||||||||
| Sales and marketing | ||||||||||
| General and administrative | ||||||||||
| Total operating expenses | ||||||||||
| Operating income | $ | $ | ||||||||
| Financial expense, net | 11 | ( | ) | ( | ) | |||||
| Loss before tax | ( | ) | ( | ) | ||||||
| Tax expense | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||||
| Loss per share | ||||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding | ||||||||||
| Basic | ||||||||||
| Diluted | ||||||||||
F-3
| Cellebrite DI Ltd. and its Subsidiaries |
| INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) |
| (U.S Dollars in thousands, except share and per share data) |
| For the six months ended | ||||||||||
| June 30, | ||||||||||
| 2024 | 2023 | |||||||||
| Note | Unaudited | Unaudited | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||||
| Change in foreign currency translation adjustment | ( | ) | ||||||||
| Change in unrealized (losses) gains on marketable securities: | ||||||||||
| Unrealized (losses) gains arising during the period | ( | ) | ||||||||
| Net change (net of tax effect of $ | ( | ) | ||||||||
| Change in unrealized (losses) gains on cash flow hedges: | 4 | |||||||||
| Unrealized losses arising during the period | ( | ) | ( | ) | ||||||
| Less -reclassification adjustment for net (losses) gains realized and included in net income | ( | ) | ||||||||
| Net change (net of tax effect of $ | ( | ) | ||||||||
| Total other comprehensive income (loss) | ( | ) | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||||
F-4
| Cellebrite DI Ltd. and its Subsidiaries |
| INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ (DEFICIENCY) EQUITY (Unaudited) |
| (U.S Dollars in thousands, except share and per share data) |
| Six months ended June 30, 2024 | ||||||||||||||||||||||||||||
| Ordinary Shares Amount | Share Capital | Additional paid in capital | Treasury Share | Retained earnings | Accumulated other comprehensive income | Total | ||||||||||||||||||||||
| Balance as of December 31, 2023 | ) | $ | ( | ) | $ | ( | ) | $ | $ | | $ | |||||||||||||||||
| Exercise of share option and vested RSUs and ESPP | ) | |||||||||||||||||||||||||||
| Share-based compensation expense and ESPP benefit | — | — | — | |||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | |||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of June 30, 2024 | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||||||||
| Six months ended June 30, 2023 | ||||||||||||||||||||||||||||
| Ordinary Shares Amount | Share Capital | Additional paid in capital | Treasury Share | Retained earnings | Accumulated other comprehensive loss | Total | ||||||||||||||||||||||
| Balance as of December 31, 2022 | ) | $ | ( | ) | $ | ( | ) | $ | $ | | $ | |||||||||||||||||
| Exercise of share option, vested RSUs and ESPP | ) | |||||||||||||||||||||||||||
| Share-based compensation expense and ESPP benefit | — | — | — | |||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
| Balance as of June 30, 2023 | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||
| *) |
F-5
| Cellebrite DI Ltd. and its Subsidiaries |
| INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) |
| (U.S Dollars in thousands, except share and per share data) |
| For the six months ended | ||||||||
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| Unaudited | Unaudited | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Share based compensation | ||||||||
| Amortization of premium, discount and accrued interest on marketable securities | ( | ) | ( | ) | ||||
| Depreciation and amortization | ||||||||
| Interest income from short term deposits | ( | ) | ( | ) | ||||
| Deferred income taxes | ( | ) | ||||||
| Remeasurement of warrant liability | ||||||||
| Remeasurement of Restricted Sponsor Shares | ||||||||
| Remeasurement of Price Adjustment Shares liabilities | ||||||||
| Decrease in trade receivables | ||||||||
| (Decrease) increase in deferred revenue | ( | ) | ||||||
| Increase in other non-current assets | ( | ) | ( | ) | ||||
| Decrease (increase) in prepaid expenses and other current assets | ( | ) | ||||||
| Changes in operating lease assets | ||||||||
| Changes in operating lease liability | ( | ) | ( | ) | ||||
| Decrease (increase) in inventories | ( | ) | ||||||
| (Decrease) increase in trade payables | ( | ) | ||||||
| Decrease in other accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Increase (decrease) in other long-term liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Purchase of Intangible assets | ( | ) | ||||||
| Investment in marketable securities | ( | ) | ( | ) | ||||
| Proceeds from maturity of marketable securities | ||||||||
| Investment in short-term deposits | ( | ) | ( | ) | ||||
| Redemption of short-term deposits | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Exercise of options to shares | ||||||||
| Proceeds from Employee Share Purchase Plan | ||||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Net effect of Currency Translation on cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash activities | ||||||||
| Operating lease liabilities arising from obtaining right of use assets | ||||||||
F-6
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
Note 1. General
Cellebrite DI Ltd. (the “Company”), an Israeli company, was incorporated on April 13, 1999 as a private company, and began its operations in July 1999. The Company and its wholly owned subsidiaries delivering a digital investigative (“DI”) suite of solutions comprising software and services for legally sanctioned investigations. The Company’s DI suite of solutions allows users to collect, review, analyze, and manage digital data across the investigative lifecycle with respect to legally sanctioned investigations The Company’s primary shareholder is SUNCORPORATION, a public company traded in the Japanese market (see also Note 12).
On April 8, 2021, the Company entered into a Business Combination Agreement and Plan of Merger (the “Merger Agreement”) with TWC Tech Holdings II Corp. (“TWC”), a public listed company in Nasdaq and Cupcake Merger Sub, Inc., a new wholly-owned subsidiary of Cellebrite (the “Merger Sub”) in the USA. TWC is a Special Purpose Acquisition Company (“SPAC”). On August 30, 2021, the Merger was consummated. Upon the terms and subject to the conditions of the Merger Agreement, at the Effective Time, Merger Sub merged with and into TWC, the separate corporate existence of Merger Sub ceased and TWC became the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”). TWC became a wholly-owned subsidiary of the Company and the security holders of TWC became security holders of the Company. In December 2023, TWC was dissolved.
Note 2. Summary of Significant Accounting Policies
| A. | Unaudited interim consolidated financial statements: |
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments necessary for a fair presentation.
The balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements of the Company at that date but does not include all information and footnotes required by U.S. GAAP for complete financial statements.
The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2023. Results for the six months ended June 30, 2024 are not necessarily indicative of results that may be expected for the year ending December 31, 2024.
The significant accounting policies applied in the annual consolidated financial statements of the Company as of December 31, 2023, have been applied consistently in these unaudited interim condensed consolidated financial statements.
Trade Receivable and Allowances
Trade receivables are recorded net of credit losses allowance for any potential uncollectible amounts.
The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon its assessment of various factors, including historical collectability experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers.
F-7
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
As of June 30, 2024 and December 31,
2023, the allowances for credit losses of trade receivable were $
The Company writes off receivables when they are deemed uncollectible, having exhausted all collection efforts. Actual collection experience may not meet expectations and may result in increased bad debt expense.
| B. | Use of estimates |
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods and accompanying notes. Actual results could differ from those estimates.
Significant items subject to such estimates and assumptions include, but are not limited to, the allocation of transaction price among various performance obligation, the fair value of acquired intangible assets and goodwill in a business combination, share-based compensation, unrecognized tax benefits, marketable securities, fair value measurement of restricted sponsor shares liability, price adjustment shares liability and warrant liabilities.
| C. | Fair value measurements |
The Company accounts for fair value in accordance with ASC 820, “Fair Value Measurements and Disclosures”. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a three-tier hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2: Inputs other than Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. |
| ● | Level 3: Unobservable inputs for the asset or liability used to measure fair value that are supported by little or no market activity and that re significant to the fair value of the asset or liability at measurement date. |
The carrying value of trade receivable and payables and the Company’s cash and cash equivalents and short-term deposits, approximates fair value due to the short time to expected payment or receipt of cash.
F-8
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
| D. | Revenue recognition |
The Company’s revenues are comprised of four main categories: (a) Subscription Services, including support services (updates, upgrades and technical support) on term-based licenses; (b) Term Licenses; (c) other non-recurring; and (d) professional services.
The Company recognizes revenue pursuant to the five-step framework contained in ASC 606, Revenue from Contracts with Customers: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligations
The Company sells its products to its customers either directly or indirectly through distribution channels all of whom are considered end users.
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services are delivered. The amount of revenue recognized reflects the consideration that the Company expects to receive in exchange for these goods or services.
The Company determines that it has a contract with a customer when each party’s rights regarding the products or services to be transferred can be identified, the payment terms for the services can be identified, the Company has determined the customer has the ability and intent to pay, and the contract has commercial substance. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation.
Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the products or services either on their own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products and services is separately identifiable from other promises in the contract.
The Company’s software licenses either provide its customers the right to use its software for a fixed term, or a perpetual right to use its software, in most cases between a one-year and three-year time frame. The Company concluded that the software license is distinct as the customer can benefit from the software on its own.
Subscription revenue is derived from maintenance and support under renewable subscription, fee-based contracts that include unspecified software updates and upgrades released when and if available as well as software support. Customers with active subscriptions are also entitled to our technical customers’ support. Performance obligations related to software maintenance services generally have a consistent continuous pattern of transfer to a customer during the contract period.
Other non-recurring revenue derived mostly from hardware sold mainly in conjunction with new software license, perpetual license and usage-based fees.
Professional services revenues primarily consist of: (i) certified training classes by Cellebrite Academy; (ii) our advanced services; (iii) implementation of our products in connection with our software licenses and (iv) on premise contracted customer success and technical support. Each of these performance obligations provide benefit to the customer on a standalone basis and are distinct in the context of the contract.
F-9
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring products or delivery of services to the customer. Payment terms generally are 30 days. The Company applied the practical expedient in ASC 606 and did not evaluate payment terms of one year or less for the existence of a significant financing component. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities (e.g., sales tax and other indirect taxes). The Company does not offer right of return to its contracts.
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on the relative standalone selling price (“SSP”) for each performance obligation. The Company uses judgment in determining the SSP for its products and services. The Company typically assesses the SSP for its products and services on a periodic basis or when facts and circumstances change. To determine SSP, the Company maximizes the use of observable standalone sales and observable data, where available. In instances where performance obligations do not have observable standalone sales, the Company utilizes available information that may include the entity specific factors such as assessment of historical data of bundled sales of software licenses with other promised goods and services, and pricing strategies to estimate the price the Company would charge if the products and services were sold separately.
The Company satisfies performance obligations either over time or at a point in time depending on the nature of the underlying promise. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. Revenues related to the license for proprietary software are recognized when the control over the license is provided to the customer and the license term begins. Revenue related to software update and upgrades are recognized ratably over the service period. Revenues related to other professional services are recognized as services are performed.
| E. | Recently issued accounting pronouncements |
Recently issued accounting pronouncements not yet adopted:
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses on an interim and annual basis. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for the fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. The Company is currently evaluating the effect of adopting the ASU on its disclosures.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted and the amendments should be applied on a prospective basis. The Company is currently evaluating the effect of adopting the ASU on its disclosures.
F-10
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
| F. | Concentrations of credit risk |
Financial instruments that potentially expose the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments, trade receivables and other receivables.
The majority of the Company’s cash and cash equivalents are invested in deposits mainly in dollars with major international banks. Generally, these cash and cash equivalents and short-term investment may be redeemed upon demand. Management believes that the financial institutions that hold the Company’s and its subsidiaries’ cash and cash equivalents are institutions with high credit standing, and accordingly, minimal credit risk exists with respect to these assets.
The Company’s trade receivables are geographically diversified and derived from sales to customers all over the world. The Company mitigates its credit risks by performing an ongoing credit evaluations of its customers’ financial conditions. The Company and its subsidiaries generally do not require collateral; however, in certain circumstances, the Company and its subsidiaries may require letters of credit, additional guarantees or advance payments.
The Company’s marketable securities consist of investments in government, corporate and government sponsored enterprises debentures. The Company’s investment policy, approved by the Board of Directors, limits the amount that the Company may invest in any one type of investment, or issuer, thereby reducing credit risk concentrations.
The Company enters into foreign currency forward and option contracts intended to protect cash flows resulting from scheduled payments such as payroll and rent related expenses against the volatility in value of forecasted non-dollar currency. The derivative instruments hedge a portion of the Company's non-dollar currency exposure.
F-11
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
Note 3. Marketable securities
| As of June 30, 2024 | ||||||||||||||||
| Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Corporate bond | ( | ) | ||||||||||||||
| Agency bond | ( | ) | ||||||||||||||
| Treasury bills | ( | ) | ||||||||||||||
| US Government | ( | ) | ||||||||||||||
| Total | ( | ) | ||||||||||||||
| As of December 31, 2023 | ||||||||||||||||
| Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||||
| Corporate bond | ( | ) | $ | |||||||||||||
| Agency bond | ( | ) | $ | |||||||||||||
| US Government | ( | ) | $ | |||||||||||||
| Total | ( | ) | ||||||||||||||
As of June 30, 2024 and December 31, 2023, no continuous unrealized losses for twelve months or greater were identified.
The allowance for credit losses for the six months ended June 30, 2024 was not material.
| June 30, 2024 | ||||
| (Unaudited) | ||||
| Due in 1 year or less | $ | |||
| Due in 1 year through 2 years | ||||
| Total | $ | |||
F-12
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
Note 4. Derivative Instruments
Company’s risk management strategy includes the use of derivative financial instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates.
ASC 815, "Derivatives and Hedging" ("ASC 815"), requires the Company to recognize all of its derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, an entity must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.
Gains and losses on derivatives instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that are attributable to a particular risk), are recorded in accumulated other comprehensive income (loss) and reclassified into statement of income in the same accounting period in which the designated forecasted transaction or hedged item affects earnings.
The Company entered into option and forward contracts
to hedge a portion of anticipated New Israeli Shekel ("NIS") payroll and benefit payments. These derivative instruments are
designated as cash flow hedges, as defined by ASC 815 and accordingly are measured at fair value.
| Net Notional amount | Fair value | |||||||||||||||
| June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Option contracts to hedge payroll | ||||||||||||||||
| expenses NIS | ||||||||||||||||
The Company currently hedges its exposure to the
variability in future cash flows for a maximum period of
| Fair value of derivative instruments | ||||||||||
| June 30, | December 31, | |||||||||
| 2024 | 2023 | |||||||||
| Balance Sheet line item | (Unaudited) | |||||||||
| Derivative liabilities: | ||||||||||
| Foreign exchange option contracts | Prepaid expenses and other current assets | $ | $ | |||||||
| Foreign exchange option contracts | Other account payable | $ | ( | ) | $ | ( | ) | |||
F-13
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
| Amount of loss recognized in other comprehensive loss on derivative, net of tax | ||||||||
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Derivatives in foreign exchange cash flow hedging relationships: | ||||||||
| Forward contracts | ( | ) | ||||||
| Option contracts | ( | ) | ( | ) | ||||
| $ | ( | ) | $ | ( | ) | |||
| Amount of gain reclassified from other comprehensive income into (expenses) income, net of tax | ||||||||||
| Six months ended June 30, | ||||||||||
| 2024 | 2023 | |||||||||
| Statements of income line | (Unaudited) | (Unaudited) | ||||||||
| Option contracts to hedge payroll and facility expenses | Cost of revenues and operating expenses | ( | ) | | ||||||
| Forward contracts to hedge payroll and facility expenses | Cost of revenues, operating expenses and financial expenses | — | ||||||||
| $ | ( | ) | $ | |||||||
F-14
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
Note 5. Leases
The Company
entered into operating leases primarily for offices. The leases have remaining lease terms of up to
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Operating lease cost | $ | $ | ||||||
| Short-term lease cost | ||||||||
| Variable lease cost | ||||||||
| Total net lease costs | $ | $ | ||||||
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| Operating lease ROU assets | $ | $ | ||||||
| Operating lease liabilities, current | $ | $ | ||||||
| Operating lease liabilities, long-term | $ | $ | ||||||
| Weighted average remaining lease term (in years) | ||||||||
| Weighted average discount rate | % | % | ||||||
| Operating Leases | ||||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 and thereafter | ||||
| Total undiscounted lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
Note 6. Commitments and contingent liabilities
From time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated the Company would accrue a liability for the estimated loss. As of June 30, 2024 and December 31, 2023, the Company is not involved in any claims or legal proceedings which require accrual of liability for the estimated loss.
F-15
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
Note 7. Shareholders’ equity
| a. | Ordinary Shares |
As of June 30, 2024 and December 31,
2023, the Company was authorized to issue
Ordinary Shares confers upon its holders the following rights:
| i. | The right to participate and vote in the Company’s general meetings. Each share will entitle its holder, when attending and participating in the voting to one vote; |
| ii. | Dividends or distribution shall be paid or be made to the holders of Ordinary Shares, shall be in an amount equal the product of the dividend or distribution payable or made on each Ordinary Share determined as if all preferred shares had been converted into Ordinary Shares and the number of Ordinary Shares issuable upon conversion of such preferred share, in each case calculated on the record date for determination of holders entitled to receive such dividend or distribution; and |
| iii. | The right to a share in the distribution of the Company’s excess assets upon liquidation pro rata to the par value of the share held by them. |
| b. | Option Plan and RSUs: |
| Number of options | Weighted- average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Outstanding at December 31, 2023 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Expired | ||||||||||||||||
| Outstanding at June 30, 2024 | $ | |||||||||||||||
| Exercisable at June 30, 2024 | $ | |||||||||||||||
The weighted average fair values at grant date
of options granted for the six months ended June 30, 2024 and 2023 were $
| June 30, 2024 | ||||
| (Unaudited) | ||||
| Unvested at beginning of year | ||||
| Granted | ||||
| Vested | ||||
| Forfeited | ||||
| Unvested at end of the period | ||||
The weighted average fair value at grant date of RSUs granted for the
six months ended June 30, 2024 was $
F-16
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
| Six months ended June 30, | ||||
| 2024 | ||||
| Contractual period in years | ||||
| Volatility | ||||
| Risk free interest rate | ||||
| Dividend yield | ||||
| Exercise price | $ | |||
| Fair value of Ordinary Share | $ | |||
| Expected term | ||||
| c. | 2021 Employee Share Purchase Plan: |
On August 5, 2021, the Company adopted the 2021 Employee Share Purchase Plan (“ESPP”).
The aggregate number of Shares that
may be issued pursuant to rights granted under the ESPP shall be
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cost of revenues | $ | $ | ||||||
| Research and development | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
As of June 30, 2024, there were unrecognized
compensation costs of $
Note 8. Net loss per share
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Numerator: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic net loss attributable to Ordinary shareholders | ( | ) | ( | ) | ||||
| Basic net loss attributable to Restricted sponsor shares | ||||||||
| Denominator: | ||||||||
| Weighted average number of Ordinary Shares used in computing basic loss per share | ||||||||
| Basic net loss per share of Ordinary shareholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of Ordinary Shares used in computing diluted net loss per share | ||||||||
| Diluted loss per share of Ordinary shareholders | $ | ( | ) | $ | ( | ) | ||
The number of shares related to outstanding
anti-dilutive options excluded from the calculations of diluted net earnings per share was
F-17
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
Note 9. Fair value measurements
| As of June 30, 2024 | ||||||||||||||||
| Fair value measurements using input type | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents: | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Commercial deposits | ||||||||||||||||
| Marketable securities: | ||||||||||||||||
| Corporate and Agency bonds | ||||||||||||||||
| Treasury bills | ||||||||||||||||
| US Government | ||||||||||||||||
| Foreign currency derivative contracts | ||||||||||||||||
| Total financial assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Restricted Sponsor Shares | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Price Adjustment Shares | ( | ) | ( | ) | ||||||||||||
| Public Warrants | ( | ) | ( | ) | ||||||||||||
| Private Placement Warrants | ( | ) | ( | ) | ||||||||||||
| Foreign currency derivative contracts | ( | ) | ( | ) | ||||||||||||
| Total financial liabilities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| As of December 31, 2023 | ||||||||||||||||
| Fair value measurements using input type | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents: | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Commercial deposits | ||||||||||||||||
| Marketable securities: | ||||||||||||||||
| Corporate and Agency bonds | ||||||||||||||||
| US Government | ||||||||||||||||
| Foreign currency derivative contracts | ||||||||||||||||
| Total financial assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Restricted Sponsor Shares | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Price Adjustment Shares | ( | ) | ( | ) | ||||||||||||
| Public Warrants | ( | ) | ( | ) | ||||||||||||
| Private Placement Warrants | ( | ) | ( | ) | ||||||||||||
| Foreign currency derivative contracts | ( | ) | ( | ) | ||||||||||||
| Total financial liabilities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Warrant liability
The Company has classified the warrants
assumed during the Merger (both public and private) as a liability pursuant to ASC 815-40 since the warrants do not meet the equity classification
conditions. Accordingly, the Company measured the warrants at their fair value.
F-18
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
| Public Warrants | Private Placement Warrants | Total Warrant liability | ||||||||||
| (Unaudited) | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | |||||||||
| Change in fair value of warrant liability | ||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | |||||||||
The estimated fair value of the private placement
warrant liabilities is determined using Level 3 inputs. Inherent in a Black-Scholes valuation model are assumptions related to expected
share-price volatility, expiration, risk-free interest rate and dividend yield. The Company estimates the volatility of its common share
based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest
rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expiration of the warrants.
The dividend yield is based on the historical rate, which the Company anticipates will remain at
| As of June 30, 2024 | As of December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Number of private placement warrants | ||||||||
| Exercise price | $ | $ | ||||||
| Share price | $ | $ | ||||||
| Expiration term (in years) | ||||||||
| Volatility | % | % | ||||||
| Risk-free Rate | % | % | ||||||
| Dividend yield | % | % | ||||||
Restricted sponsor shares liability and Price adjustment shares liability
The restricted Sponsor shares liability and Price adjustment shares are measured at fair value using Level 3 inputs.
| Restricted sponsor shares | Price adjustment shares | Total | ||||||||||
| (Unaudited) | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | |||||||||
| Change in fair value of warrant liability | ||||||||||||
| Balance, June 30,2024 | $ | $ | $ | |||||||||
| June 30, 2024 | December 31, 2023 | |||||||||||||||
| Restricted sponsor shares | Price adjustment shares | Restricted sponsor shares | Price adjustment shares | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Number of shares | ||||||||||||||||
| Share price | $ | $ | $ | $ | ||||||||||||
| Remaining exercise period | ||||||||||||||||
| Share value | $ | $ | $ | $ | ||||||||||||
F-19
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
Note 10. Revenues
Disaggregation of Revenues
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| EMEA | $ | $ | ||||||
| America | ||||||||
| APAC | ||||||||
| Total | $ | $ | ||||||
Contract Balances
| June 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Contract liabilities, current | $ | $ | ||||||
| Contract liabilities, non-current | $ | |||||||
Contract assets consist of unbilled accounts receivable, which occur when a right to consideration for the Company’s performance under the customer contract occurs before invoicing to the customer. The increase in contract balances is consistent with the increase in the overall operation of the Company.
Contract liabilities consist of deferred revenue.
Revenue is deferred when the Company invoices in advance of performance under a contract. The current portion of the deferred revenue
balance is recognized as revenue during the 12-month period after the balance sheet date. The non current portion of the deferred
revenue balance is recognized as revenue following the 12-month period after the balance sheet date. Of the $
Remaining Performance Obligations
The Company’s remaining performance obligations
are comprised of product and services revenue not yet delivered. As of June 30, 2024 and December 31, 2023, the aggregate amount
of the transaction price allocated to remaining performance obligations was $
F-20
| Cellebrite DI Ltd. and its Subsidiaries | |
| Notes to Interim Consolidated Financial Statements | |
| U.S. dollars (in thousands, except share and per share data) | |
Note 11. Financial expenses, net
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Financial income: | ||||||||
| Interest on deposits | ||||||||
| Foreign currency translation differences | ||||||||
| Marketable securities | ||||||||
| Other | ||||||||
| Total Financial income | ||||||||
| Financial expenses: | ||||||||
| Remeasurement of liability instruments | ( | ) | ( | ) | ||||
| Bank charges | ( | ) | ( | ) | ||||
| Changes in exchange rates | ( | ) | ( | ) | ||||
| Other | ( | ) | ( | ) | ||||
| Total Financial expenses | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
Note 12. Transactions and Balances with Related Parties
SUN Corporation, the Company’s primary shareholder is also a reseller of the Company in the Japanese market.
a.
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues | ||||||||
b.
| June 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Trade Receivables | ||||||||
Note 13. Subsequent events
On July 17, 2024, the Company completed the
acquisition of
On August 14, 2024, the Company achieved the first
trigger event (as defined in the Business Combination Agreement) regarding the price adjustment shares and the restricted sponsor shares
by reaching a share price of $
F-21