CCC Intelligent Solutions (US:CCCS)2023-07-31 16:00Revenue 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]