CCC Intelligent Solutions (CCCS) - 2024 Q2 - Quarterly Results

Q2 2024 Financial Results Announcement Second Quarter 2024 Financial Highlights CCC reported strong second quarter 2024 results, featuring a 10% year-over-year revenue increase to $232.6 million and a significant improvement in profitability Q2 2024 Key Financial Metrics (GAAP) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $232.6 | $211.7 | +10% YoY | | Gross Profit | $177.3 | $152.6 | +16.2% YoY | | Gross Margin | 76% | 72% | +4 p.p. | | Operating Income (Loss) | $22.5 | ($73.2) | Turnaround | | Net Income (Loss) | $21.4 | ($97.3) | Turnaround | Q2 2024 Key Financial Metrics (Non-GAAP) | Metric | Q2 2024 (in millions) | Q2 2023 (in millions) | Change | | :--- | :--- | :--- | :--- | | Adjusted Gross Profit | $182.1 | $162.0 | +12.4% YoY | | Adjusted Gross Margin | 78% | 77% | +1 p.p. | | Adjusted Operating Income | $86.0 | $71.8 | +19.8% YoY | | Adjusted Net Income | $56.2 | $47.8 | +17.6% YoY | | Adjusted EBITDA | $95.8 | $80.9 | +18% YoY | | Adjusted EBITDA Margin | 41% | 38% | +3 p.p. | - As of June 30, 2024, the company held $237.9 million in cash and cash equivalents against $780.0 million in total debt[33] - Free cash flow for the quarter was $36.2 million, a decrease from $55.0 million in the prior-year quarter[33] Business and Operational Highlights The company launched CCC® Build Sheets to streamline the collision repair process and expanded its network, increasing the public float to over 70% - Launched CCC® Build Sheets, a new solution integrated into CCC ONE® that provides detailed vehicle specifications from the VIN to help create more accurate initial repair estimates and improve shop productivity[3] - The company's network grew by over 600 collision repair facilities in the first half of 2024, bringing the total to over 30,000 repair facilities[3] - The entire customer base now exceeds 35,000, including insurers, parts suppliers, and automotive OEMs[3] - Two secondary offerings of common stock by existing shareholders were completed in May and July 2024, totaling 80 million shares[11] - This increased the company's publicly traded float from approximately 30% in October 2023 to over 70%, with the company receiving no proceeds from these sales[11] Business Outlook CCC has issued financial guidance for the third quarter and full fiscal year of 2024, projecting revenue and Adjusted EBITDA ranges Financial Guidance as of July 30, 2024 | Metric | Third Quarter Fiscal 2024 (in millions) | Full Year Fiscal 2024 (in millions) | | :--- | :--- | :--- | | Revenue | $236.0 - $238.0 | $941.0 - $945.0 | | Adjusted EBITDA | $97.0 - $99.0 | $391.0 - $395.0 | Consolidated Financial Statements Condensed Consolidated Statements of Operations For the three months ended June 30, 2024, CCC reported revenues of $232.6 million, a significant increase from $211.7 million in the prior year, achieving an operating income turnaround Q2 2024 vs Q2 2023 Statement of Operations (in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Revenues | $232,618 | $211,710 | | Gross Profit | $177,297 | $152,586 | | Total Operating Expenses | $154,784 | $225,773 | | Operating Income (Loss) | $22,513 | $(73,187) | | Net Income (Loss) Attributable to Stockholders | $20,224 | $(97,659) | | Diluted EPS | $0.03 | $(0.16) | Condensed Consolidated Balance Sheets As of June 30, 2024, CCC's balance sheet showed total assets of $3.08 billion, with increased cash and cash equivalents and decreased total liabilities Balance Sheet Summary (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $237,893 | $195,572 | | Total Current Assets | $408,934 | $349,999 | | Goodwill | $1,417,724 | $1,417,724 | | Total Assets | $3,079,158 | $3,051,040 | | Total Current Liabilities | $146,591 | $152,907 | | Long-Term Debt—Net | $764,249 | $767,504 | | Total Liabilities | $1,166,565 | $1,252,179 | | Total Stockholders' Equity | $1,893,646 | $1,782,277 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash provided by operating activities was $107.0 million, with cash used in investing and financing activities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $107,009 | $102,632 | | Net cash used in investing activities | $(31,224) | $(29,084) | | Net cash used in financing activities | $(33,328) | $6,614 | | Net change in cash and cash equivalents | $42,321 | $79,789 | Reconciliation of GAAP to Non-GAAP Measures Reconciliation to Adjusted Gross Profit For Q2 2024, GAAP Gross Profit of $177.3 million was adjusted to an Adjusted Gross Profit of $182.1 million, resulting in an Adjusted Gross Profit Margin of 78% Q2 Gross Profit Reconciliation (in thousands) | Description | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | GAAP Gross Profit | $177,297 | $152,586 | | Amortization of acquired technologies | $2,090 | $6,646 | | Stock-based compensation | $2,693 | $2,358 | | Adjusted Gross Profit | $182,080 | $162,021 | | GAAP Gross Profit Margin | 76% | 72% | | Adjusted Gross Profit Margin | 78% | 77% | Reconciliation to Adjusted Operating Income The company's Q2 2024 GAAP operating income of $22.5 million was reconciled to an adjusted operating income of $86.0 million, primarily due to stock-based compensation and amortization adjustments Q2 Operating Income Reconciliation (in thousands) | Description | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | GAAP Operating Income (Loss) | $22,513 | $(73,187) | | Stock-based compensation | $40,768 | $36,064 | | Amortization of intangible assets | $17,942 | $18,022 | | Amortization of acquired technologies | $2,090 | $6,646 | | Impairment of goodwill & intangibles | $0 | $82,311 | | Other adjustments | $2,670 | $1,537 | | Adjusted Operating Income | $85,983 | $71,824 | Reconciliation to Adjusted EBITDA Adjusted EBITDA for Q2 2024 increased 18% to $95.8 million, reconciled from GAAP Net Income with adjustments for non-cash expenses and interest Q2 Net Income to Adjusted EBITDA Reconciliation (in thousands) | Description | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | GAAP Net Income (Loss) | $21,445 | $(97,344) | | Interest Expense, Net | $13,977 | $9,991 | | Income Tax (Benefit) Provision | $4,307 | $(2,281) | | D&A | $29,758 | $33,428 | | Stock-based compensation | $40,768 | $36,064 | | Change in fair value of warrant liabilities | $(15,963) | $20,375 | | Impairment of goodwill & intangibles | $0 | $82,742 | | Other adjustments | $1,505 | $(676) | | Adjusted EBITDA | $95,797 | $80,899 | Reconciliation to Adjusted Net Income For Q2 2024, Adjusted Net Income was $56.2 million, or $0.09 per diluted share, reflecting adjustments for non-cash items and tax effects Q2 Net Income to Adjusted Net Income Reconciliation (in thousands) | Description | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | GAAP Net Income (Loss) | $21,445 | $(97,344) | | Stock-based compensation | $40,768 | $36,064 | | Amortization (Intangibles & Acquired Tech) | $20,032 | $24,668 | | Change in fair value of warrant liabilities | $(15,963) | $20,375 | | Impairment of goodwill & intangibles | $0 | $82,742 | | Tax effect of adjustments | $(13,618) | $(16,587) | | Other adjustments | $3,522 | $(2,076) | | Adjusted Net Income | $56,186 | $47,842 | | Adjusted Diluted EPS | $0.09 | $0.07 | Reconciliation to Free Cash Flow In Q2 2024, the company generated $36.2 million in Free Cash Flow, derived from net cash provided by operating activities less capital expenditures Q2 Free Cash Flow Reconciliation (in thousands) | Description | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $51,774 | $69,554 | | Purchases of software, equipment, and property | $(15,561) | $(14,560) | | Free Cash Flow | $36,213 | $54,994 |