[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited statements show revenue growth alongside a net loss driven by goodwill impairment and positive operating cash flow Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $613,747 | $479,070 | | Cash and cash equivalents | $448,733 | $323,788 | | **Goodwill** | $1,417,724 | $1,495,129 | | **Intangible Assets—Net** | $1,039,555 | $1,118,819 | | **Total Assets** | **$3,341,783** | **$3,350,921** | | **Total Current Liabilities** | $148,554 | $151,565 | | **Long-Term Debt—Net** | $769,136 | $774,132 | | **Total Liabilities** | **$1,282,801** | **$1,291,455** | | **Total Stockholders' Equity** | **$2,043,478** | **$2,045,287** | Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $221,147 | $198,734 | $637,777 | $578,342 | | **Gross Profit** | $163,121 | $145,607 | $463,495 | $422,975 | | **Operating Income (Loss)** | $16,571 | $17,054 | $(43,286) | $42,228 | | **Impairment of Goodwill** | - | - | $77,405 | - | | **Net (Loss) Income** | $(21,202) | $9,795 | $(116,362) | $37,334 | | **Diluted EPS** | $(0.04) | $0.02 | $(0.19) | $0.06 | Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $163,138 | $118,438 | | **Net cash used in investing activities** | $(43,187) | $(67,185) | | **Net cash provided by financing activities** | $5,383 | $15,006 | | **Net change in cash and cash equivalents** | $124,945 | $65,609 | | **Cash and cash equivalents, end of period** | $448,733 | $248,153 | - In May 2023, the company performed a quantitative assessment of its China reporting unit due to adverse market conditions and rising interest rates, resulting in a **goodwill impairment charge of $77.4 million**[40](index=40&type=chunk) - The company also recorded an **impairment charge of $5.3 million** on its China reporting unit's customer relationships and acquired technologies intangible assets due to unrecoverable carrying amounts based on cash flow forecasts[243](index=243&type=chunk) - As of September 30, 2023, the company has approximately **$1.423 billion in remaining performance obligations**, with $561 million expected to be recognized as revenue in the next twelve months[214](index=214&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | Cost of revenues | $6,595 | $4,167 | | Research and development | $18,833 | $14,433 | | Sales and marketing | $25,264 | $18,331 | | General and administrative | $53,779 | $43,838 | | **Total** | **$104,471** | **$80,769** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth, increased operating expenses, a significant impairment charge, and non-GAAP performance metrics - The company's SaaS platform connects over 35,000 companies in the P&C insurance economy, processing **more than $100 billion in annual transaction value**[98](index=98&type=chunk) - CCC has deep customer penetration, with **18 of the top 20 U.S. automotive insurance carriers** and over 29,000 collision repair facilities on its network[100](index=100&type=chunk)[98](index=98&type=chunk) - The company is actively using AI, with over 100 U.S. auto insurers using its AI-powered solutions and having processed **over 14 million unique claims with deep learning AI** as of year-end 2022[98](index=98&type=chunk) Software Net Dollar Retention (NDR) | Quarter Ending | 2023 | 2022 | | :--- | :--- | :--- | | March 31 | 106% | 114% | | June 30 | 107% | 111% | | September 30 | 107% | 110% | Software Gross Dollar Retention (GDR) | Quarter Ending | 2023 | 2022 | | :--- | :--- | :--- | | March 31 | 99% | 99% | | June 30 | 99% | 99% | | September 30 | 98% | 99% | Q3 2023 vs Q3 2022 Financial Comparison (in thousands) | Metric | Q3 2023 | Q3 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $221,147 | $198,734 | $22,413 | 11.3% | | Gross Profit | $163,121 | $145,607 | $17,514 | 12.0% | | Operating Income | $16,571 | $17,054 | $(483) | -2.8% | | Net (Loss) Income | $(22,212) | $9,795 | $(32,007) | NM | - The increase in Q3 revenue was primarily a result of **8% growth from existing customer upgrades** and expanding solution offerings, and **3% growth from new customers**[95](index=95&type=chunk) Nine Months 2023 vs 2022 Financial Comparison (in thousands) | Metric | Nine Months 2023 | Nine Months 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $637,777 | $578,342 | $59,435 | 10.3% | | Gross Profit | $463,495 | $422,975 | $40,520 | 9.6% | | Operating (Loss) Income | $(43,286) | $42,228 | $(85,514) | NM | | Net (Loss) Income | $(117,687) | $37,334 | $(155,021) | NM | - For the nine months ended Sep 30, 2023, the company recorded **impairment charges of $77.4 million for goodwill** and **$4.9 million for intangible assets** related to its China reporting unit[125](index=125&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Period | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net (Loss) Income | $(21,202) | $9,795 | $(116,362) | $37,334 | | Adjustments... | ... | ... | ... | ... | | **Adjusted EBITDA** | **$92,927** | **$78,116** | **$253,360** | **$225,297** | Adjusted Net Income and EPS | Period | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Adjusted Net Income (thousands)** | $57,161 | $46,604 | $151,494 | $132,449 | | **Adjusted Diluted EPS** | $0.09 | $0.07 | $0.23 | $0.21 | Free Cash Flow Reconciliation (in thousands) | Period | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $163,138 | $118,438 | | Less: Purchases of software, equipment, and property | $(43,187) | $(38,844) | | **Free Cash Flow** | **$119,951** | **$79,594** | - The company believes its existing cash of **$448.7 million**, operating cash flows, and available credit will be sufficient to fund operations for at least the next twelve months[136](index=136&type=chunk) - As of September 30, 2023, the company had **$786.0 million principal outstanding on its Term B Loan** and **$249.3 million available under its revolving credit facility**[136](index=136&type=chunk)[137](index=137&type=chunk) - In May 2023, the company amended its credit agreement to **replace LIBOR with SOFR** as the benchmark interest rate[137](index=137&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Market risk disclosures remain materially unchanged from the 2022 Annual Report on Form 10-K - There have been **no material changes** in the company's market risk from what was disclosed in the 2022 Annual Report on Form 10-K[180](index=180&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - The principal executive officer and principal financial officer concluded that as of September 30, 2023, the company's **disclosure controls and procedures were effective**[159](index=159&type=chunk) - **No changes in internal control over financial reporting** occurred during Q3 2023 that materially affected, or are reasonably likely to materially affect, internal controls[182](index=182&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) Pending legal actions are not expected to have a material adverse effect on the company's financial position - Management believes that pending or threatened legal actions are **not expected to have a material adverse effect** on the Company's consolidated financial position or results of operations[183](index=183&type=chunk)[69](index=69&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section references the risk factors detailed in the company's 2022 Annual Report on Form 10-K - The report refers to the 'Risk Factors' section in the **Annual Report on Form 10-K for the year ended December 31, 2022**, for a detailed discussion of business risks[184](index=184&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) Two company executives terminated their Rule 10b5-1 trading arrangements during the third quarter of 2023 - During Q3 2023, **two executives, Mary Jo Prigge and Rodney Christo, terminated their Rule 10b5-1 trading arrangements**[187](index=187&type=chunk)

Company Overview - CCC's platform facilitates over $100 billion in annual transactions within the P&C insurance economy[12] - The company boasts a high gross dollar retention rate of 99% and a net dollar retention of 107%[19] - CCC has demonstrated durable, long-term organic growth with an 11% revenue CAGR from 2015 to 2022[19] Financial Performance - The company has a strong adjusted EBITDA margin of 39% in 2022[19] - CCC targets long-term revenue growth of 7-10% annually[59] - As of June 30, 2023, the adjusted gross profit margin was calculated to be 77%[105] Market and Solutions - Nearly half (42%) of the entire P&C insurance market is auto insurance, with claims of approximately $225 billion[28] - CCC connects over 35,000 companies within the insurance economy, facilitating over $100 billion in annual transactions[30, 31] - The US auto market presents a $9 billion market opportunity for CCC[72] - CCC's cloud platform processes 49 billion database transactions daily[87]

CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS) Q2 2023 Earnings Conference Call August 1, 2023 5:00 PM ET Company Participants Bill Warmington - VP, IR Githesh Ramamurthy - Chairman and CEO Brian Herb - CFO Conference Call Participants Kirk Materne - Evercore ISI Dylan Becker - William Blair Gabriela Borges - Goldman Sachs Saket Kalia - Barclays Michael Funk - Bank of America Tyler Radke - Citi Chris Moore - CJS Securities Gary Prestopino - Barrington Research Arvind Ramnani - Piper Sandler Operator ...

Revenue and Deferred Revenue - Revenue recognized from deferred revenue for Q2 2023 was $39.1 million, compared to $32.2 million in Q2 2022[9] - Deferred revenue balance at the end of Q2 2023 was $41.203 million, up from $34.742 million in Q2 2022[9] - Revenue recognized from deferred revenue for H1 2023 was $34.6 million, compared to $30.2 million in H1 2022[9] - Total deferred contract costs at the end of Q2 2023 were $36.351 million, slightly up from $35.890 million in Q2 2022[9] Acquisition and Goodwill - Total purchase price for the acquisition was $32.5 million, with goodwill accounting for $28.245 million[6] - The company recorded a measurement period adjustment of $0.9 million for deferred tax liabilities, increasing goodwill[6] - The fair value of acquired technology intangible asset was determined to be $4.8 million[6] - Transaction costs associated with the acquisition amounted to $1.2 million[6] Financial Performance - Total revenues for Q2 2023 were $211.71 million, compared to $192.79 million in Q2 2022[36] - Net loss for Q2 2023 was $97.66 million, compared to a net income of $15.56 million in Q2 2022[36] - Gross profit for Q2 2023 was $152.59 million, up from $139.94 million in Q2 2022[36] - Operating loss for Q2 2023 was $73.19 million, compared to an operating income of $12.52 million in Q2 2022[36] - Comprehensive loss for Q2 2023 was $97.94 million, compared to a comprehensive income of $15.26 million in Q2 2022[36] - Net loss attributable to common stockholders was $97.7 million for the three months ended June 30, 2023, and $95.5 million for the six months ended June 30, 2023[91] - Net loss for the three months ended June 30, 2023 was $97.3 million, compared to a net income of $15.6 million in the same period in 2022[224] - Adjusted EBITDA for the six months ended June 30, 2023 was $160.4 million, with an Adjusted EBITDA Margin of 39%[224] - Adjusted EBITDA for the six months ended June 30, 2023 was $142.1 million, compared to $133.5 million in the same period in 2022[235] - Adjusted net income for the six months ended June 30, 2023 was $94.3 million, compared to $86.3 million in the same period in 2022[238] - Adjusted earnings per share (diluted) for the six months ended June 30, 2023 was $0.15, compared to $0.13 in the same period in 2022[238] Expenses and Costs - Research and development expenses for Q2 2023 were $43.36 million, up from $38.76 million in Q2 2022[36] - Total cost of revenues for Q2 2023 was $59.12 million, up from $52.85 million in Q2 2022[36] - Interest expense for Q2 2023 was $14.01 million, compared to $7.94 million in Q2 2022[36] - Depreciation and amortization expense for software, equipment, and property was $8.8 million for Q2 2023[53] - Total lease costs for Q2 2023 were $2,503, with operating lease costs at $1,486 and variable lease costs at $1,017[54] - Selling and marketing expense increased by $4.8 million to $35.9 million, or 15.6%, for Q2 2023 compared to Q2 2022[133] - Research and development expense increased by $4.6 million to $43.4 million, or 11.9%, for the three months ended June 30, 2023[164] - Selling and marketing expense increased by $11.6 million to $69.5 million for the six months ended June 30, 2023, primarily due to higher personnel-related costs[215] - General and administrative expense increased by $4.3 million to $88.0 million for the six months ended June 30, 2023, primarily due to higher personnel-related costs[228] - Adjusted operating expenses were $176.5 million for the six months ended June 30, 2023[221] Intangible Assets and Impairment - Net carrying amount of intangible assets as of June 30, 2023 is $1,064,064, with customer relationships contributing $848,661 and acquired technologies at $24,933[74] - The company recorded an impairment charge of $5.3 million for its China reporting unit's customer relationships and acquired technologies intangible assets during the three months ended June 30, 2023[98] - Amortization expense for intangible assets was $24.7 million for the three months ended June 30, 2023, and $49.4 million for the six months ended June 30, 2023[99] - The company recorded a goodwill impairment charge of $77.4 million for its China reporting unit due to adverse market conditions and increased interest rates[96] - The company recorded a goodwill impairment charge of $77.4 million for the China reporting unit during the three months ended June 30, 2023[171] - Impairment of goodwill for the six months ended June 30, 2023 was $77.4 million[235] Loans and Interest Rates - Term B Loan outstanding amount as of June 30, 2023 is $788.0 million, with $8.0 million classified as current[78] - Weighted-average interest rate on Term B Loan for Q2 2023 was 7.4%, with interest payments of $14.6 million[78] - Unamortized debt discount for Term B Loan as of June 30, 2023 is $1.6 million[77] - Unamortized financing costs for Term B Loan as of June 30, 2023 are $7.7 million[77] - Deferred financing fees asset balance for 2021 Revolving Credit Facility as of June 30, 2023 is $2.0 million[77] - The company entered into two interest rate cap agreements with an aggregate notional value of $600.0 million, a cap rate of 4.0%, and an expiration date of July 31, 2025[80] - The aggregate fair value of the interest rate cap agreements was $13.0 million as of June 30, 2023, compared to $12.0 million as of December 31, 2022[80] - The company's Term B Loan balance was $788.0 million as of June 30, 2023, compared to $792.0 million as of December 31, 2022[79] - The weighted-average interest rate on the outstanding borrowings under the Term B Loan increased from 3.2% in 2022 to 7.1% in 2023[103] - The weighted-average interest rate on the Term B Loan for the six months ended June 30, 2023 was 7.1%, compared to 3.2% in the same period in 2022[227] Warrant Liabilities - The company had 17,800,000 Private Warrants outstanding as of June 30, 2023, with an exercise price of $11.50 per share[86] - The company recognized a loss of $20.4 million as a change in fair value of warrant liabilities for the three months ended June 30, 2023[86] - The company's warrant liability was $55.6 million as of June 30, 2023, compared to $36.4 million as of December 31, 2022[86] - The company recognized a loss of $20.4 million from a change in fair value of warrant liabilities for the three months ended June 30, 2023[167] - Change in fair value of warrant liabilities resulted in an expense of $19.2 million for the six months ended June 30, 2023[207] Cash Flow and Working Capital - Net cash provided by operating activities was $102.6 million for the six months ended June 30, 2023, compared to $87.7 million in the same period in 2022[168] - Free cash flow for the six months ended June 30, 2023 was $73.5 million, compared to $62.2 million in the same period in 2022[238] - The company generated $102.6 million in cash flows from operating activities during the six months ended June 30, 2023[238] - As of June 30, 2023, the company had cash and cash equivalents of $403.6 million and a working capital surplus of $416.3 million[238] Stock and Compensation - The company issued 1,818 shares of Series A Preferred Stock at $7,854 per share, representing a 10.0% ownership interest in CCC Cayman as of June 30, 2023[82] - Total stock-based compensation expense was $35.5 million for the three months ended June 30, 2023, compared to $28.4 million in the same period in 2022[85] - The company granted 539,400 stock options under the Cayman Incentive Plans during the six months ended June 30, 2023[109] - Stock-based compensation expense and related employer payroll tax for the six months ended June 30, 2023 was $67.3 million, compared to $53.3 million in the same period in 2022[235] Taxes - Income tax payments for the six months ended June 30, 2023 were $20.0 million, with refunds totaling $39 thousand[65] - The company's effective tax rate for the three months ended June 30, 2023 was 2.3%, compared to 39.4% for the same period in 2022[64] - Income tax benefit for the six months ended June 30, 2023 was $3.1 million, compared to an income tax provision of $9.3 million in the same period in 2022[218] Customer and Market Data - One customer accounted for 11% of accounts receivable as of June 30, 2023[67] - The company has customer agreements with more than 300 insurers and over 35,000 total customers, including 29,000 automotive collision repair facilities[122] - The company processed more than $1 trillion of historical data across its network, leveraging insurance claims, vehicle repair, and automotive parts information[121] - The company has processed more than 14 million unique claims using CCC deep learning AI as of December 31, 2022, a 50% increase over December 31, 2021[121] Other Financial Metrics - Accounts receivable as of June 30, 2023, were $96.14 million, down from $98.35 million as of December 31, 2022[67] - Total other liabilities as of June 30, 2023 are $1,550, including deferred revenue—non-current at $1,139[77] - Total accrued expenses decreased from $71.445 million in December 2022 to $54.711 million in June 2023[100] - Credit card processing revenues increased from $198 million in June 2022 to $274 million in June 2023[113] - Employee health insurance benefits decreased to $209 million as of June 30, 2023, from $501 million as of December 31, 2022[142] - Software NDR was 107% for Q2 2023, compared to 111% for Q2 2022[152] - Software GDR remained stable at 99% for both Q2 2023 and Q2 2022[154] - Revenues increased by $18.9 million to $211.7 million, or 9.8%, for Q2 2023 compared to Q2 2022[155] - Cost of revenues increased by $6.3 million to $59.1 million, or 11.9%, for Q2 2023 compared to Q2 2022[163] - Total revenues increased by $18.9 million to $211.7 million, or 9.8%, for the three months ended June 30, 2023, compared to the same period in 2022[156] - Software subscription revenues accounted for $202.9 million, or 96%, of total revenue for the three months ended June 30, 2023[156] - Gross profit increased by $12.6 million to $152.6 million, or 9.0%, for the three months ended June 30, 2023, with a gross profit margin of 72.1%[158] - Revenue increased by $37.0 million to $416.6 million, or 9.8%, for the six months ended June 30, 2023[199] - Gross profit increased by $23.0 million to $300.4 million, or 8.3%, for the six months ended June 30, 2023[203] - Cost of revenues increased by $14.0 million to $116.3 million, or 13.7%, for the six months ended June 30, 2023[202] - Interest expense increased by $12.6 million to $27.8 million, or 82.2%, for the six months ended June 30, 2023[206] - Amortization of acquired technologies was $13.3 million for the six months ended June 30, 2023[202] - Interest income was $7.3 million for the six months ended June 30, 2023[217] - Adjusted Gross Profit for the six months ended June 30, 2023 was $318.6 million, with an Adjusted Gross Profit Margin of 76%[233] - Interest expense for the six months ended June 30, 2023 was $27.8 million, compared to $15.3 million in the same period in 2022[224] - The Company recognized $1.0 million income from a change in fair value of derivative instruments for the six months ended June 30, 2023[230] - Adjusted operating income for the three months ended June 30, 2023 was $71.8 million, compared to $66.7 million in the same period in 2022[235] - The company had $788.0 million aggregate principal outstanding on its term loan as of June 30, 2023[238]

Financial Data and Key Metrics Changes - In Q1 2023, total revenue was $205 million, reflecting a 10% year-over-year increase and exceeding guidance [9][37] - Adjusted EBITDA for the quarter was $79.5 million, an 8% increase year-over-year, with an adjusted EBITDA margin of 39% [41][51] - Software gross dollar retention (GDR) was 99%, consistent with 2022, indicating strong customer retention [38] - Adjusted gross profit margin decreased to 76% from 78% in Q1 2022, primarily due to higher depreciation expenses [47][40] Business Line Data and Key Metrics Changes - The annualized run rate value of auto claims processed by Estimate-STP reached over $1 billion, more than 10 times the run rate in March 2022 [28] - In Q1 2023, over 0.5 million scanned vehicles were verified on the CCC network, more than double the volume in Q1 2022 [30] - CCC Engage eliminated 50,000 phone calls from repair facilities monthly, generating 25,000 leads per month for repair facilities [32] Market Data and Key Metrics Changes - CCC's insurance revenue represents about 0.2% of the total annual amount insurers spend on claims, indicating significant growth potential [42] - The average total cost of repair for electric vehicles (EVs) in 2022 was 50% higher than for non-EVs, highlighting the increasing complexity and costs associated with EVs [16][125] Company Strategy and Development Direction - The company focuses on innovation and the development of AI-driven solutions to enhance efficiency and customer satisfaction in the P&C insurance economy [10][12] - CCC aims to digitize the P&C insurance economy, leveraging its interconnected network and advanced AI capabilities to drive growth [55][56] - The company is expanding its product offerings, including the integration of Safekeep's technology to streamline the subrogation process [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on strategic and financial objectives, anticipating continued growth in revenue and profitability [35][56] - The digitization trend in the P&C insurance economy is expected to accelerate, providing a favorable environment for CCC's solutions [56][125] - Management noted that while Q2 may experience margin pressure due to seasonal expenses, they expect margins to improve in the second half of the year [52][91] Other Important Information - The company ended Q1 2023 with $338 million in cash and cash equivalents and $790 million in debt, resulting in a net leverage of approximately 1.5x adjusted EBITDA [49] - Free cash flow for Q1 was $18.5 million, down from $32.6 million in the prior year, primarily due to seasonal factors [50] Q&A Session Summary Question: Can you help us think about the quantification of Estimate-STP and Diagnostics and their impact on revenue growth? - Management indicated that as DWP increases, CCC's revenue as a percentage of total spend has slightly decreased, but they are optimistic about delivering more solutions [59][60] - The annualized run rate for Estimate-STP has reached $1 billion, with significant growth expected from emerging solutions [62][64] Question: Can you discuss the casualty business and its growth drivers? - The casualty business currently represents about 10% of revenue, with significant growth potential as the company expands its customer base in this area [81][72] Question: What are the margin dynamics for Q2 and the impact of dual hosting costs? - Management acknowledged margin pressure in Q2 due to headcount additions and nonrecurring costs, but they expect margins to improve in the second half of the year [91][92] Question: How is the AI boom influencing customer conversations and product adoption? - Increased visibility and awareness of AI are positively impacting customer interest and adoption of CCC's AI-driven products [85][88] Question: How does the company view the opportunity in diagnostics and scanning? - The complexity of vehicles necessitates increased scanning capabilities, and the company has seen a doubling of scans from Q1 2022 to Q1 2023 [111][112]

FORM 10-Q | --- | --- | --- | |---------------------------------------------------------------------------------------------------------------|----------------------------------------|--------------------------------------------------| | | | | | Delaware (State or other jurisdiction of incorporation or organization) | 001-39447 (Commission File Number) | 98-1546280 (IRS Employer Identification No.) | | 167 N. Green Street, 9th Floor Chicago, Illinois (Address Of Principal Executive Offices) | | 60607 (Zip C ...

Business Strategy and Growth - The company is focusing on the growth and expansion of its SaaS business, which requires significant investment in technical, financial, and sales resources[21] - Future success depends on the ability to sell additional solutions to existing customers; failure to do so could decrease revenue growth[21] - The company expects to continue expanding operations, which may require significant capital expenditures and could divert resources from other projects[23] - The company’s R&D efforts focus on enhancing solutions for operational efficiency, security, and privacy in the cloud, with a geographically dispersed engineering team[408] - The company’s marketing and sales organizations engage with decision-makers across the P&C insurance economy to drive software adoption and expansion[409] Market and Competition - The company anticipates that the market for cloud-based solutions will become increasingly competitive, necessitating greater investment in research and development[22] - Increased competition and rising inflation are impacting operating costs, with a substantial portion of costs being personnel-related[22] - The Chinese economy has experienced uneven growth, with a gradual slowdown since 2010, exacerbated by COVID-19, potentially reducing demand for the company's solutions and services[25] - The company faces increased risks related to operating in China, including potential violations of anti-corruption laws due to government involvement in the economy[25] Operational Challenges - The company has experienced operational challenges due to the pandemic, impacting productivity and the execution of business plans[23] - The company is monitoring the impact of public health outbreaks on technology spending by customers, which could affect demand for its solutions[21] - The reliance on third-party service providers for SaaS solutions poses risks related to system failures and service interruptions[33] - The company is migrating core IT systems to third-party cloud providers, and failure to manage this transition effectively could lead to service disruptions and unforeseen costs[33] Regulatory and Compliance Issues - The company is subject to extensive government regulations, which could reduce demand for its solutions if customers fail to comply[24] - The company may incur substantial expenses to comply with new data privacy regulations, which could adversely affect its operations and financial results[30] - Regulatory changes in data privacy could impose additional costs and liabilities, affecting the company's ability to deliver SaaS solutions[30] - The company is subject to increasing global trade laws and regulations, which may impact its operations[26] Financial Performance and Stability - The company faces potential penalties from service level agreements if it fails to meet stipulated service levels, which could adversely affect financial results[21] - As of December 31, 2022, total debt outstanding was $792 million under the Term B Loan, with an additional unused borrowing capacity of $249.3 million under the 2021 Revolving Credit Facility[34] - The aggregate market value of the company's common shares held by non-affiliates was approximately $1,273 million as of June 30, 2022[414] Data Management and Technology - The company processes over 176 terabytes of network traffic and executes nearly 4.9 billion database transactions each day[407] - The company received, processed, and stored nearly 800 million photos each year, demonstrating significant data handling capabilities[407] - The software suite is provided as SaaS with a system availability of 99.95% since 2018, ensuring high reliability for users[407] - The company has invested in hyperscale infrastructure to effectively process and store large amounts of information, enhancing operational efficiency[407] - In 2022, the company deployed more than 1,600 software releases, maintaining a release quality success rate averaging over 96% since 2018[407] - The company enables over 500 million interface transactions each year across its network of more than 300 insurers and 28,000 repair facilities[407] Customer Relationships - The company has established strong customer relationships with over 30,000 total customers in its end markets, with average contract durations of 3 to 5 years for insurance and repair customers[410] - In 2022, the company served 18 of the top 20 automotive insurers in the U.S. based on Direct Written Premium (DWP), with average customer relationships exceeding 10 years[410] - The company has more than 28,000 automotive collision repair customers, including national and regional MSOs, with an average contract duration of approximately 3 years[410] - The company collaborates with over 4,500 parts suppliers and 13 of the top 15 automotive manufacturers as of 2022, enhancing its position in the P&C insurance economy[410] Risk Management - The company maintains liability insurance for cyber incidents, but claims could exceed coverage limits, impacting financial stability[28] - Ongoing litigation, including class action lawsuits regarding valuation solutions, could result in significant costs and harm the company's reputation[31] - The company must navigate the complexities of open source software licensing, which could limit its proprietary technology and impact its business[28]

Financial Data and Key Metrics Changes - For Q3 2022, total revenue was $199 million, representing a 13% year-over-year increase and exceeding guidance [8][31] - Adjusted EBITDA was $78 million, up 11% year-over-year, with an adjusted EBITDA margin of 39.3% [8][38] - The company raised its revenue and adjusted EBITDA guidance for the full year based on strong Q3 performance [8] Business Line Data and Key Metrics Changes - Approximately 10% of revenue growth in Q3 was driven by cross-sell and upsell within the existing client base, with 99% of revenue being domestic [31][32] - Software gross dollar retention (GDR) was 99%, indicating strong customer retention [32] - Software net dollar retention (NDR) was 110%, reflecting successful cross-sell and upsell opportunities [34] Market Data and Key Metrics Changes - Repair costs in 2022 were over 12% higher than the same period in 2021, with a national average scheduling backlog for auto accident repair reaching 4.8 weeks [21] - The company noted that 99% of its revenue comes from domestic sources, highlighting its strong market presence [32] Company Strategy and Development Direction - The company focuses on continuous investment in innovation, leveraging a scalable cloud architecture to roll out new products quickly [10][11] - CCC aims to drive digital transformation in the auto insurance economy, with a strong emphasis on customer relationships and operational efficiencies [12][19] - The company is positioned to capitalize on the increasing complexity of vehicles and the need for digital solutions in the insurance sector [20][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying momentum of the business and the long-term growth opportunities in their product portfolio [41][46] - The company anticipates durable growth in revenue and profitability, driven by the need for digitization across the property and casualty insurance economy [46] - Management highlighted the importance of customer adoption of new solutions as a key driver for future growth [52] Other Important Information - The company ended the quarter with $248 million in cash and cash equivalents and $794 million in debt, with a net leverage of approximately 1.8 times adjusted EBITDA [39] - Free cash flow for the quarter was $17.4 million, with a year-to-date conversion of approximately 43% of adjusted EBITDA into unlevered free cash flow [40] Q&A Session Summary Question: Insights on long-term growth rate and visibility into 2023 - Management indicated that adoption of newer solutions will drive growth rates, with a focus on customer feedback and product rollout [48][51] Question: Key projects for new Chief Commercial and Customer Success Officer - The new hire will focus on understanding customer needs and rolling out new solutions effectively [54] Question: Adoption of claims automation and future innovation - Management noted that early traction with Estimate-STP indicates strong potential for broader claims automation [56][58] Question: Impact of used vehicle values on the business - Management clarified that while total loss valuations have decreased, the business model remains unaffected due to its design [69][72] Question: Adoption catalysts for Estimate-STP - The increasing complexity of vehicles and the efficiency of AI solutions are expected to accelerate adoption [73][75] Question: Renewal pipeline outlook for 2023 - Management expressed confidence in the renewal pipeline and opportunities for cross-sell and upsell [90][93]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ CCC INTELLIGENT SOLUTIONS HOLDINGS INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | |------------ ...

CCC Intelligent Solutions Holdings Inc. (NASDAQ:CCCS) Q2 2022 Earnings Conference Call August 4, 2022 5:00 PM ET Company Participants William Warmington – Vice President-Investor Relations Githesh Ramamurthy – Chairman and Chief Executive Officer Brian Herb – Chief Financial Officer Conference Call Participants Dylan Becker – William Blair David Kelley – Jefferies Adi Ahire – Evercore ISI Chris Moore – CJS Securities Tyler Radke – Citi Gary Prestopino – Barrington Research Operator Greetings, ladies and gen ...