CCC Intelligent Solutions 10Q 2024 Q3 Quarterly report

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, 2024


☐	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)

Delaware

001-39447

98-1546280

(State or other jurisdiction

of incorporation or organization)

(Commission

File Number)

(IRS Employer

Identification No.)

167 N. Green Street, 9th Floor

Chicago, Illinois

(Address Of Principal Executive Offices)

60607

(Zip Code)

(800) 621-8070

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	CCCS	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 21, 2024, 625,502,334 shares of common stock, $0.0001 par value per share, were issued and outstanding.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC.

Form 10-Q

For the Quarter Ended September 30, 2024

Table of Contents


		Page
PART I. FINANCIAL INFORMATION`

	Cautionary Statement Regarding Forward-Looking Statements	3
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023	5
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023	6
	Unaudited Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023	7
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	40

PART II. OTHER INFORMATION



Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41

FORWARD-LOOKING STATEMENTS

The section titled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" as well as other parts of this Quarterly Report on Form 10-Q contain "forward-looking statements" for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the future financial performance and business strategies and expectations for our business. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include information concerning our possible or assumed future results of operations, client demand, business strategies, technology developments, financing and investment plans, competitive position, our industry and regulatory environment, potential growth opportunities and the effects of competition.

Important factors that could cause actual results to differ materially from our expectations include:

•

our revenues, the concentration of our customers and the ability to retain our current customers;

•

our ability to negotiate with our customers on favorable terms;

•

our ability to maintain and grow our brand and reputation cost-effectively;

•

the execution of our growth strategy;

•

the impact of public health outbreaks, epidemics or pandemics on our business and results of operations;

•

our projected financial information, growth rate and market opportunity;

•

the health of our industry, claim volumes, and market conditions;

•

changes in the insurance and automotive collision industries, including the adoption of new technologies;

•

global economic conditions and geopolitical events;

•

competition in our market and our ability to retain and grow market share;

•

our ability to develop, introduce and market new enhanced versions of our solutions;

•

our sales and implementation cycles;

•

the ability of our research and development efforts to create significant new revenue streams;

•

changes in applicable laws or regulations;

•

changes in international economic, political, social and governmental conditions and policies, including corruption risks in China and other countries;

•

our reliance on third-party data, technology and intellectual property;

•

changes in our customers' or the public's perceptions regarding the use of artificial intelligence ("AI");

•

our ability to protect our intellectual property;

•

our ability to keep our data and information systems secure from data security breaches;

•

our ability to acquire or invest in companies or pursue business partnerships;

•

our ability to raise financing in the future and improve our capital structure;

•

our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

our ability to expand or maintain our existing customer base; and

•

our ability to service our indebtedness.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are

beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described above and under the heading "Risk Factors." Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	September 30,			December 31,
	2024			2023
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	286,303		$	195,572
Accounts receivable—Net of allowances of $4,392 and $5,574 as of September 30, 2024 and December 31, 2023, respectively		129,606			102,365
Income taxes receivable		298			1,798
Deferred contract costs		19,707			17,900
Other current assets		31,858			32,364
Total current assets		467,772			349,999
SOFTWARE, EQUIPMENT, AND PROPERTY—Net		178,462			160,416
OPERATING LEASE ASSETS		29,572			30,456
INTANGIBLE ASSETS—Net		952,392			1,015,046
GOODWILL		1,417,724			1,417,724
DEFERRED FINANCING FEES, REVOLVER—Net		1,760			1,672
DEFERRED CONTRACT COSTS		21,396			22,302
EQUITY METHOD INVESTMENT		10,228			10,228
OTHER ASSETS		35,243			43,197
TOTAL	$	3,114,549		$	3,051,040
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	21,804		$	16,324
Accrued expenses		57,598			71,478
Income taxes payable		1,986			3,689
Current portion of long-term debt		8,000			8,000
Current portion of long-term licensing agreement—Net		3,207			3,061
Operating lease liabilities		7,662			6,788
Deferred revenues		46,577			43,567
Total current liabilities		146,834			152,907
LONG-TERM DEBT—Net		762,639			767,504
DEFERRED INCOME TAXES—Net		162,424			195,365
LONG-TERM LICENSING AGREEMENT—Net		25,268			27,692
OPERATING LEASE LIABILITIES		47,682			50,796
WARRANT LIABILITIES		—			51,501
OTHER LIABILITIES		9,316			6,414
Total liabilities		1,154,163			1,252,179
COMMITMENTS AND CONTINGENCIES (Notes 18 and 19)
MEZZANINE EQUITY:
Redeemable non-controlling interest		20,267			16,584
STOCKHOLDERS’ EQUITY:
Preferred stock—$0.0001 par; 100,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock—$0.0001 par; 5,000,000,000 shares authorized; 625,325,706 and 603,128,781 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		63			60
Additional paid-in capital		3,042,590			2,909,757
Accumulated deficit		(1,101,487	)		(1,126,467	)
Accumulated other comprehensive loss		(1,047	)		(1,073	)
Total stockholders’ equity		1,940,119			1,782,277
TOTAL	$	3,114,549		$	3,051,040

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share data)

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
REVENUES	$	238,481		$	221,147		$	698,336		$	637,777
COST OF REVENUES
Cost of revenues, exclusive of amortization and impairment of acquired technologies		54,890			51,459			160,929			153,954
Amortization of acquired technologies		171			6,567			8,828			19,897
Impairment of acquired technologies		—			—			—			431
Total cost of revenues		55,061			58,026			169,757			174,282
GROSS PROFIT		183,420			163,121			528,579			463,495
OPERATING EXPENSES:
Research and development		49,525			43,532			148,255			127,891
Selling and marketing		34,347			35,605			106,254			105,072
General and administrative		52,918			49,471			161,247			137,477
Amortization of intangible assets		17,942			17,942			53,826			54,030
Impairment of goodwill		—			—			—			77,405
Impairment of intangible assets		—			—			—			4,906
Total operating expenses		154,732			146,550			469,582			506,781
OPERATING INCOME (LOSS)		28,688			16,571			58,997			(43,286	)
INTEREST EXPENSE		(16,379	)		(14,633	)		(49,434	)		(42,480	)
INTEREST INCOME		3,343			5,165			8,435			12,447
CHANGE IN FAIR VALUE OF WARRANT LIABILITIES		—			(26,223	)		14,378			(45,403	)
OTHER (EXPENSE) INCOME—NET		(2,587	)		(264	)		1,606			1,114
PRETAX INCOME (LOSS)		13,065			(19,384	)		33,982			(117,608	)
INCOME TAX (PROVISION) BENEFIT		(8,933	)		(1,818	)		(9,002	)		1,246
NET INCOME (LOSS) INCLUDING NON-CONTROLLING INTEREST		4,132			(21,202	)		24,980			(116,362	)
LESS: ACCRETION OF REDEEMABLE NON-CONTROLLING INTEREST		(1,320	)		(1,010	)		(3,683	)		(1,325	)
NET INCOME (LOSS) ATTRIBUTABLE TO CCC INTELLIGENT SOLUTIONS HOLDINGS INC. COMMON STOCKHOLDERS	$	2,812		$	(22,212	)	$	21,297		$	(117,687	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.00		$	(0.04	)	$	0.04		$	(0.19	)
Diluted	$	0.00		$	(0.04	)	$	0.03		$	(0.19	)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Basic		615,857,231			624,976,557			608,073,087			620,841,922
Diluted		642,404,517			624,976,557			639,069,491			620,841,922
COMPREHENSIVE INCOME (LOSS):
Net income (loss) including non-controlling interest		4,132			(21,202	)		24,980			(116,362	)
Other comprehensive loss—Foreign currency translation adjustment		117			(23	)		26			(274	)
COMPREHENSIVE INCOME (LOSS) INCLUDING NON-CONTROLLING INTEREST		4,249			(21,225	)		25,006			(116,636	)
Less: accretion of redeemable non-controlling interest		(1,320	)		(1,010	)		(3,683	)		(1,325	)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CCC INTELLIGENT SOLUTIONS HOLDINGS INC. COMMON STOCKHOLDERS	$	2,929		$	(22,235	)	$	21,323		$	(117,961	)

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(In thousands, except number of shares)

(Unaudited)


	Redeemable
	Non-Controlling		Preferred Stock—Issued and Outstanding				Common Stock—Issued and Outstanding										Accumulated
	Interest										Additional						Other			Total
			Number of		Par		Number of		Par		Paid-In			Accumulated			Comprehensive			Stockholders’
			Shares		Value		Shares		Value		Capital			Deficit			Loss			Equity
BALANCE—December 31, 2023	$	16,584		—	$	—		603,128,781	$	60	$	2,909,757		$	(1,126,467	)	$	(1,073	)	$	1,782,277
Stock-based compensation expense		—		—		—		—		—		44,971			—			—			44,971
Exercise of stock options		—		—		—		3,346,599		—		8,822			—			—			8,822
Issuance of common stock under employee stock purchase plan		—		—		—		194,307		—		1,833			—			—			1,833
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		7,588,048		1		(52,581	)		—			—			(52,580	)
Accretion of redeemable non-controlling interest		1,142		—		—		—		—		(1,142	)		—			—			(1,142	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			(75	)		(75	)
Net loss		—		—		—		—		—		—			(597	)		—			(597	)
BALANCE—March 31, 2024		17,726		—		—		614,257,735		61		2,911,660			(1,127,064	)		(1,148	)		1,783,509
Stock-based compensation expense		—		—		—		—		—		40,125			—			—			40,125
Exercise of stock options		—		—		—		4,518,651		1		12,823			—			—			12,824
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		209,515		—		(142	)		—			—			(142	)
Warrant redemption		—		—		—		3,809,200		—		37,122			—			—			37,122
Accretion of redeemable non-controlling interest		1,221		—		—		—		—		(1,221	)		—			—			(1,221	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			(16	)		(16	)
Net income		—		—		—		—		—		—			21,445			—			21,445
BALANCE—June 30, 2024		18,947		—		—		622,795,101		62		3,000,367			(1,105,619	)		(1,164	)		1,893,646
Stock-based compensation expense		—		—		—		—		—		42,125			—			—			42,125
Exercise of stock options		—		—		—		878,686		—		2,303			—			—			2,303
Issuance of common stock under employee stock purchase plan		—		—		—		414,584		—		3,912			—			—			3,912
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		1,237,335		1		(4,797	)		—			—			(4,796	)
Accretion of redeemable non-controlling interest		1,320		—		—		—		—		(1,320	)		—			—			(1,320	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			117			117
Net income		—		—		—		—		—		—			4,132			—			4,132
BALANCE—September 30, 2024	$	20,267		—	$	—		625,325,706	$	63	$	3,042,590		$	(1,101,487	)	$	(1,047	)	$	1,940,119

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(In thousands, except number of shares)

(Unaudited)


	Redeemable
	Non-Controlling		Preferred Stock—Issued and Outstanding				Common Stock—Issued and Outstanding										Accumulated
	Interest										Additional						Other			Total
			Number of		Par		Number of		Par		Paid-In			Accumulated			Comprehensive			Stockholders’
			Shares		Value		Shares		Value		Capital			Deficit			Loss			Equity
BALANCE—December 31, 2022	$	14,179		—	$	—		622,072,905	$	62	$	2,754,055		$	(707,946	)	$	(884	)	$	2,045,287
Stock-based compensation expense		—		—		—		—		—		28,930			—			—			28,930
Exercise of stock options		—		—		—		3,214,093		1		8,242			—			—			8,243
Issuance of common stock under employee stock purchase plan		—		—		—		179,338		—		1,326			—			—			1,326
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		2,217,379		—		(11,449	)		—			—			(11,449	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			34			34
Net income		—		—		—		—		—		—			2,184			—			2,184
BALANCE—March 31, 2023		14,179		—		—		627,683,715		63		2,781,104			(705,762	)		(850	)		2,074,555
Stock-based compensation expense		—		—		—		—		—		35,900			—			—			35,900
Exercise of stock options—net of tax		—		—		—		3,996,713		—		12,585			—			—			12,585
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		302,063		—		(90	)		—			—			(90	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			(285	)		(285	)
Accretion of redeemable non-controlling interest		315		—		—		—		—		(315	)		—			—			(315	)
Net loss		—		—		—		—		—		—			(97,344	)		—			(97,344	)
BALANCE—June 30, 2023		14,494		—		—		631,982,491		63		2,829,184			(803,106	)		(1,135	)		2,025,006
Stock-based compensation expense		—		—		—		—		—		39,751			—			—			39,751
Exercise of stock options—net of tax		—		—		—		912,124		—		2,411			—			—			2,411
Issuance of common stock under employee stock purchase plan		—		—		—		462,353		—		3,435			—			—			3,435
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		1,276,211		—		(4,890	)		—			—			(4,890	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			(23	)		(23	)
Accretion of redeemable non-controlling interest		1,010		—		—		—		—		(1,010	)		—			—			(1,010	)
Net loss		—		—		—		—		—		—			(21,202	)		—			(21,202	)
BALANCE—September 30, 2023	$	15,504		—	$	—		634,633,179	$	63	$	2,868,881		$	(824,308	)	$	(1,158	)	$	2,043,478

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Nine Months Ended
	September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	24,980		$	(116,362	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of software, equipment, and property		29,520			28,025
Amortization of intangible assets		62,654			73,927
Impairment of goodwill and intangible assets		—			82,742
Deferred income taxes		(32,941	)		(40,785	)
Stock-based compensation		127,221			104,471
Amortization of deferred financing fees		1,452			1,295
Amortization of discount on debt		191			170
Change in fair value of derivative instruments		4,775			(563	)
Change in fair value of warrant liabilities		(14,378	)		45,403
Non-cash lease expense		—			1,232
Loss on disposal of software, equipment and property		302			—
Other		163			171
Changes in:
Accounts receivable—Net		(27,237	)		(19,340	)
Deferred contract costs		(1,807	)		(438	)
Other current assets		1,670			6,727
Deferred contract costs—Non-current		906			582
Other assets		1,724			(3,572	)
Operating lease assets		1,580			581
Income taxes		(203	)		12,223
Accounts payable		5,483			(9,368	)
Accrued expenses		(14,896	)		(9,335	)
Operating lease liabilities		(2,878	)		(1,181	)
Deferred revenues		3,024			6,646
Other liabilities		(1,064	)		(113	)
Net cash provided by operating activities		170,241			163,138
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of software, equipment, and property		(45,073	)		(43,187	)
Net cash used in investing activities		(45,073	)		(43,187	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		23,997			23,051
Proceeds from employee stock purchase plan		5,745			4,761
Payments for employee taxes withheld upon vesting of equity awards		(57,519	)		(16,429	)
Payments of fees associated with the revolver debt modification		(661	)		—
Principal payments on long-term debt		(6,000	)		(6,000	)
Net cash (used in) provided by financing activities		(34,438	)		5,383
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		1			(389	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		90,731			124,945
CASH AND CASH EQUIVALENTS:
Beginning of period		195,572			323,788
End of period	$	286,303		$	448,733
NONCASH INVESTING AND FINANCING ACTIVITIES:
Noncash purchases of software, equipment, and property	$	7,305		$	1,923
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	48,294		$	40,983
Cash paid for income taxes—Net	$	42,137		$	27,316

See notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ORGANIZATION AND nature of operations

CCC Intelligent Solutions Holdings Inc. (the "Company"), a Delaware corporation, is a leading software as a service ("SaaS") platform for the multi-trillion-dollar property and casualty ("P&C") insurance economy, powering operations for insurers, repairers, automakers, parts suppliers, lenders and more. CCC's cloud technology connects businesses digitizing mission-critical workflows, commerce and customer experiences.

The Company's cloud-based SaaS platform connects trading partners, facilitates commerce and supports mission-critical artificial intelligence ("AI") enabled digital workflows.

The Company is headquartered in Chicago, Illinois. The Company’s primary operations are in the United States ("US") and it also has operations in China.

The Company was originally incorporated as a Cayman Islands exempted company on July 3, 2020 as a special purpose acquisition company under the name Dragoneer Growth Opportunities Corp ("Dragoneer"). On February 2, 2021, Cypress Holdings Inc. ("CCCIS"), a Delaware corporation, entered into a Business Combination Agreement (the "Business Combination Agreement") with Dragoneer. In connection with the closing of the business combination ("Business Combination"), Dragoneer changed its jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a Delaware corporation on July 30, 2021, upon which Dragoneer changed its name to CCC Intelligent Solutions Holdings Inc.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation—The condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023, the condensed consolidated statements of mezzanine equity and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operations and cash flows have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or any future period.

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission ("SEC"). The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, the condensed consolidated financial statements may not include all the information and footnotes necessary for a complete presentation of the Company's financial position, results of operations or cash flows. These condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The Company's significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the significant accounting policies since December 31, 2023.

Basis of Accounting—The accompanying condensed consolidated financial statements are prepared in accordance with GAAP and include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements include 100% of the accounts of wholly-owned and majority-owned subsidiaries and the ownership interest of the minority investor is recorded as a non-controlling interest in a subsidiary.

Use of Estimates—The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts, and the disclosures of contingent amounts, in the Company’s condensed

consolidated financial statements and the accompanying notes. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from management’s estimates if past experience or other assumptions are not substantially accurate. Significant estimates in these condensed consolidated financial statements include the estimation of contract transaction prices, the determination of the amortization period for contract assets, the valuation of goodwill and intangible assets, the valuation of the warrant liabilities, and the estimates and assumptions associated with stock incentive plans.

Reclassifications—Certain reclassifications of prior period amounts have been made to conform to the current period presentation. For the three and nine months ended September 30, 2024, changes in the fair value of the Company's interest rate cap agreements are recognized within other (expense) income—net in the condensed consolidated statements of operations and comprehensive income (loss). Corresponding amounts recognized during the three and nine months ended September 30, 2023, were previously classified as a change in fair value of derivative instruments and have been reclassified to conform to the current period presentation. The amounts reclassified had no impact on net income (loss).

Recently Issued Accounting Pronouncements—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. This update requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The amendments in this update are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the disclosure requirements related to this update.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. The amendments in this update are effective for fiscal years beginning after December 31, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is evaluating the disclosure requirements related to this update.

REvenue

Disaggregation of Revenue—The Company provides disaggregation of revenue based on type of service as it believes these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The following table summarizes revenue by type of service for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Software subscriptions	$	229,425	$	212,497	$	670,335	$	611,582
Other		9,056		8,650		28,001		26,195
Total revenues	$	238,481	$	221,147	$	698,336	$	637,777

Transaction Price Allocated to the Remaining Performance Obligations—Remaining performance obligations represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of September 30, 2024, approximately $1,512 million of revenue is expected to be recognized from remaining performance obligations in the amount of approximately $636 million during the following twelve months, and approximately $876 million thereafter. The estimated revenues do not include unexercised contract renewals. The remaining performance obligations exclude future transaction revenue where revenue is recognized as the services are rendered and in the amount to which the Company has the right to invoice.

Deferred Revenue—Revenue recognized for the three months ended September 30, 2024 from amounts in deferred revenue as of June 30, 2024 was $42.8 million. Revenue recognized for the three months ended September 30, 2023 from amounts in deferred revenue as of June 30, 2023 was $37.1 million. Revenue recognized for the nine months ended September 30, 2024 from amounts in deferred revenue as of December 31, 2023 was $41.1 million. Revenue recognized for the nine months ended September 30, 2023 from amounts in deferred revenue as of December 31, 2022 was $34.7 million.

Contract Assets and Liabilities—The opening and closing balances of the Company’s receivables, contract assets and contract liabilities from contracts with customers are as follows (in thousands):


	September 30,		December 31,
	2024		2023
Accounts receivables—Net of allowances	$	129,606	$	102,365
Deferred contract costs		19,707		17,900
Long-term deferred contract costs		21,396		22,302
Other assets (accounts receivable, non-current)		16,451		15,198
Deferred revenues		46,577		43,567
Other liabilities (deferred revenues, non-current)		1,770		1,373

A summary of the activity impacting deferred revenue balances during the three and nine months ended September 30, 2024 and 2023 is presented below (in thousands):


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Balance at beginning of period	$	48,101		$	41,203		$	44,940		$	36,479
Revenue recognized1		(120,315	)		(109,109	)		(353,523	)		(323,827	)
Additional amounts deferred1		120,561			110,934			356,930			330,376
Balance at end of period	$	48,347		$	43,028		$	48,347		$	43,028

Classified as:
Current	$	46,577		$	41,885		$	46,577		$	41,885
Non-current		1,770			1,143			1,770			1,143
Total deferred revenue	$	48,347		$	43,028		$	48,347		$	43,028

1 Amounts include total revenue deferred and recognized during each respective period.

A summary of the activity impacting the deferred contract costs during the three and nine months ended September 30, 2024 and 2023 is presented below (in thousands):


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Balance at beginning of period	$	41,093		$	36,351		$	40,202		$	36,717
Costs amortized		(5,651	)		(4,705	)		(16,222	)		(14,128	)
Additional amounts deferred		5,661			4,927			17,123			13,984
Balance at end of period	$	41,103		$	36,573		$	41,103		$	36,573

Classified as:
Current	$	19,707		$	16,994		$	19,707		$	16,994
Non-current		21,396			19,579			21,396			19,579
Total deferred contract costs	$	41,103		$	36,573		$	41,103		$	36,573

FAIR VALUE measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Private Warrants—Upon consummation of the Business Combination, the Company assumed warrants sold in a private placement ("Private Warrants") issued by Dragoneer. In May 2024, the Private Warrants were redeemed and as of September 30, 2024, no Private Warrants were outstanding (see Note 17).

As of December 31, 2023, the Company's Private Warrants were recognized as liabilities and measured at fair value on a recurring basis.

The Private Warrants were valued using Level 1 and Level 2 inputs within the Black-Scholes option pricing model. The assumptions utilized under the Black-Scholes option pricing model require judgments and estimates. Changes in these inputs and assumptions could affect the measurement of the estimated fair value of the Private Warrants. Accordingly, the Private Warrants were classified within Level 2 of the fair value hierarchy.

The valuation of the Private Warrants as of December 31, 2023 was determined using the Black-Scholes option pricing model using the following assumptions:


	December 31,
	2023
Expected term (in years)		2.6
Expected volatility		34	%
Expected dividend yield		0	%
Risk-free interest rate		4.10	%

The estimated fair value of each Private Warrant using the Company's stock price on the valuation date and above assumptions was $2.89 as of December 31, 2023.

Contingent Consideration Liability—The contingent consideration liability relates to the Company's acquisition of Safekeep, Inc. in February 2022. The contingent consideration liability is adjusted each reporting period for changes in fair value, which can result from changes in anticipated payments and changes in assumed discount rates. These inputs are unobservable in the market and therefore categorized as Level 3 inputs.

The estimated fair value of the contingent consideration was determined using probability-weighted discounted cash flows and a Monte Carlo simulation model. The discount rate, based on the Company's estimated cost of debt, was 10%.

As of December 31, 2023, the contingent consideration liability had a fair value of $0.1 million. As of September 30, 2024, there were no significant changes to the inputs used within the Monte Carlo simulation model and the estimated fair value of the contingent consideration liability was $0.1 million. The Company did not recognize any change in the estimated fair value of the contingent consideration liability during the three and nine months ended September 30, 2024 or the three and nine months ended September 30, 2023. The contingent consideration liability is recognized within accrued expenses and other liabilities within the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

Interest Rate Cap—In August 2022, the Company entered into two interest rate cap agreements to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt (see Note 13). The fair value of the interest rate cap agreements was estimated using inputs that were observable or that could be corroborated by observable market data and therefore was classified within Level 2 of the fair value hierarchy as of September 30, 2024 and December 31, 2023.

The Company did not designate its interest rate cap agreements as hedging instruments and records the changes in fair value within other (expense) income—net on the condensed consolidated statements of operations and comprehensive income (loss). As of September 30, 2024 and December 31, 2023, the interest rate cap agreements had a fair value of $1.4 million and $6.2 million, respectively. The fair value of the interest rate cap agreements is classified within other current assets and other assets in the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

The following table presents the fair value of the assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 (in thousands):


	Fair Value		Level 1		Level 2		Level 3
Assets
Interest rate cap	$	1,433	$	—	$	1,433	$	—
Total Assets	$	1,433	$	—	$	1,433	$	—
Liabilities
Contingent consideration related to business acquisition	$	100	$	—	$	—	$	100
Total Liabilities	$	100	$	—	$	—	$	100

The following table presents the fair value of the assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 (in thousands):


	Fair Value		Level 1		Level 2		Level 3
Assets
Interest rate cap	$	6,208	$	—	$	6,208	$	—
Total assets	$	6,208	$	—	$	6,208	$	—
Liabilities
Contingent consideration related to business acquisition	$	100	$	—	$	—	$	100
Private warrants		51,501		—		51,501		—
Total Liabilities	$	51,601	$	—	$	51,501	$	100

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis—The Company has assets that under certain conditions are subject to measurement at fair value on a nonrecurring basis. These assets include those associated with acquired businesses, including goodwill and other intangible assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. The Company did not recognize any impairment charges related to these assets during the three and nine months ended September 30, 2024 and the three months ended September 30, 2023. During the nine months ended September 30, 2023, the Company recognized impairment charges of goodwill and definite-lived intangible assets (see Note 10).

Fair Value of Other Financial Instruments—The following table presents the carrying amounts, net of debt discount, and the estimated fair values of the Company’s financial instruments that are not recorded at fair value on the condensed consolidated balance sheets (in thousands):


	September 30, 2024				December 31, 2023
	Carrying		Estimated		Carrying		Estimated
Description	Amount		Fair Value		Amount		Fair Value
Term B Loan, including current portion	$	776,755	$	777,028	$	782,564	$	784,000

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar instruments and fluctuates with changes in applicable interest rates among other factors. The fair value of long-term debt is classified as a Level 2 measurement in the fair value hierarchy and is established based on observable inputs in less active markets.

INCOME TAXES

The Company recognized an income tax provision of $8.9 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively. The income tax provision for the three months ended September 30, 2024 was primarily due to the Company's pre-tax book income. The income tax provision for the three months ended September 30, 2023 was primarily due to the tax treatment of the loss on the change in the fair value of warrant liabilities.

The Company recognized an income tax provision of $9.0 million and an income tax benefit of $1.2 million for the nine months ended September 30, 2024 and 2023, respectively. The income tax provision for the nine months ended September 30, 2024 was primarily due to the Company's pre-tax book income. The income tax benefit for the nine months ended September 30, 2023 was primarily due to the tax benefit related to stock-based compensation expense, the tax benefit recognized related to the impairment of certain intangible assets and the tax benefit related to a return to provision adjustment related to estimated research and development credits.

The Company made income tax payments of $11.6 million and $7.4 million during the three months ended September 30, 2024 and 2023, respectively. The Company received negligible refunds from various states during the three months ended September 30, 2024 and 2023.

The Company made income tax payments of $42.1 million and $27.4 million during the nine months ended September 30, 2024 and 2023, respectively. The Company received negligible refunds from various states during the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, unrecognized tax benefits were materially consistent with the amount as of December 31, 2023. The Company believes its liability for unrecognized tax benefits, excluding interest and penalties, will not significantly change over the following twelve months.

accounts receivable

Accounts receivable—Net as of September 30, 2024 and December 31, 2023, consists of the following (in thousands):


	September 30,			December 31,
	2024			2023
Accounts receivable	$	133,998		$	107,939
Allowance for credit losses and sales reserves		(4,392	)		(5,574	)
Accounts receivable—Net	$	129,606		$	102,365

As of September 30, 2024, two customers each accounted for 11% of accounts receivable. As of December 31, 2023, no customer accounted for more than 10% of accounts receivable.

Changes to the allowance for credit losses and sales reserves during the three and nine months ended September 30, 2024 and 2023 consist of the following (in thousands):


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Balance at beginning of period	$	4,079		$	5,874		$	5,574		$	5,339
Charges to bad debt and sales reserves		1,270			150			3,029			5,302
Write-offs—Net		(957	)		(972	)		(4,211	)		(5,589	)
Balance at end of period	$	4,392		$	5,052		$	4,392		$	5,052

OTHER CURRENT ASSETS

Other current assets as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30,		December 31,
	2024		2023
Prepaid service fees	$	8,695	$	5,992
Prepaid SaaS costs		8,546		7,833
Prepaid insurance		3,376		2,289
Prepaid software and equipment maintenance		1,578		5,547
Other		9,663		10,703
Total other current assets	$	31,858	$	32,364

SOFTWARE, EQUIPMENT, AND PROPERTY

Software, equipment, and property as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30,			December 31,
	2024			2023
Software, licenses and database	$	267,917		$	220,625
Computer equipment		21,923			27,467
Leasehold improvements		30,966			31,046
Building and land		4,910			4,910
Furniture and other equipment		1,332			1,370
Total software, equipment, and property		327,048			285,418
Less accumulated depreciation and amortization		(148,586	)		(125,002	)
Software, equipment, and property—Net	$	178,462		$	160,416

Depreciation and amortization expense related to software, equipment and property was $10.4 million and $10.1 million for the three months ended September 30, 2024 and 2023, respectively.

Depreciation and amortization expense related to software, equipment and property was $29.5 million and $28.0 million for the nine months ended September 30, 2024 and 2023, respectively.

LEASES

The Company leases real estate in the form of office space and data center facilities. Generally, at the inception of the contract, the term for real estate leases ranges from 1 to 17 years and the term for equipment leases is 1 to 3 years. Some real estate leases include options to renew that can extend the original term by 3 to 5 years.

The components of lease expense for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Operating lease costs	$	1,937	$	1,361	$	4,644	$	4,350
Variable lease costs		1,228		881		3,422		2,782
Total lease costs	$	3,165	$	2,242	$	8,066	$	7,132

During the three months ended September 30, 2024 and 2023, the Company made cash payments for operating leases of $2.4 million and $1.8 million, respectively. During the nine months ended September 30, 2024 and 2023, the Company made cash payments for operating leases of $6.2 million and $3.8 million, respectively.

During the nine months ended September 30, 2024, the Company obtained operating lease assets in exchange for lease liabilities of $0.9 million. During the nine months ended September 30, 2023, the Company did not obtain any operating lease assets in exchange for lease liabilities.

10.

GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets are primarily the result of business acquisitions.

The Company performs its annual impairment assessment of goodwill and indefinite life intangible assets as of November 30 of each year.

No impairments to goodwill or indefinite life intangible assets were recorded during the three and nine months ended September 30, 2024.

In May 2023, the Company's China reporting unit experienced adverse impacts as a result of changes in market conditions and increases in interest rates which contributed to reduced forecasted revenues and reduced projected future cash flows. As a result of these adverse impacts, the Company performed an interim quantitative assessment of goodwill impairment by comparing the fair value of its China reporting unit to its carrying value, including goodwill. When performing the assessment, the Company determined the fair value of its China reporting unit based on forecasted future cash flows. Based on the Company's forecast of the future cash flows of its China reporting unit, it was determined the carrying value of goodwill for its China reporting unit was impaired and the Company recorded a goodwill impairment charge of $77.4 million.

When performing the quantitative impairment assessment, the Company used a quantitative approach to measure the fair value of its China reporting unit using a discounted cash flow approach, which is a Level 3 measurement. The discounted cash flow analysis requires significant judgments, including estimates of future cash flows, which are dependent on internal forecasts and determination of the Company’s weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used for the China reporting unit in the Company’s analysis was 12.5%.

As of November 30, 2023, the Company performed a qualitative assessment for its remaining reporting unit with goodwill and its trademark indefinite life intangible assets. The Company determined there were no indicators of impairment and that it was more likely than not that the fair value of the reporting unit and trademarks were greater than their carrying values and therefore performing the next step of the impairment test was unnecessary.

The following table presents the gross amount, accumulated impairment loss and carrying amount of goodwill as of September 30, 2024 and December 31, 2023 (in thousands):


			Accumulated			Net
	Gross Amount		Impairment Loss			Carrying Amount
Balance as of September 30, 2024	$	1,520,926	$	(103,202	)	$	1,417,724
Balance as of December 31, 2023		1,520,926		(103,202	)		1,417,724

The accumulated impairment loss as of December 31, 2023 was due to the impairment charge discussed above of $77.4 million and an impairment charge of $25.8 million recognized during the year ended December 31, 2019.

There were no changes in the carrying amount of goodwill during the three and nine months ended September 30, 2024.

Intangible Assets—No intangible asset impairments were recorded during the three and nine months ended September 30, 2024.

During the nine months ended September 30, 2023, the Company recorded an impairment charge to its China reporting unit's customer relationships and acquired technologies intangible assets. The Company's forecast of the revenue and expense cash flow of the China reporting unit indicated the carrying amounts of the intangible assets were not recoverable and therefore the Company recorded an impairment charge of $5.3 million.

The intangible assets balance as of September 30, 2024 is reflected below (in thousands):


		Weighted-
		Average
	Estimated	Remaining		Gross					Net
	Useful Life	Useful Life		Carrying		Accumulated			Carrying
	(Years)	(Years)		Amount		Amortization			Amount
Customer relationships	18		10.6	$	1,291,830	$	(532,880	)	$	758,950
Acquired technologies	7		4.3		184,640		(181,668	)		2,972
Subtotal					1,476,470		(714,548	)		761,922
Trademarks—indefinite life					190,470		—			190,470
Total intangible assets				$	1,666,940	$	(714,548	)	$	952,392

The intangible assets balance as of December 31, 2023 is reflected below (in thousands):


		Weighted-
		Average
	Estimated	Remaining		Gross					Net
	Useful Life	Useful Life		Carrying		Accumulated			Carrying
	(Years)	(Years)		Amount		Amortization			Amount
Customer relationships	16–18		11.3	$	1,291,830	$	(479,054	)	$	812,776
Acquired technologies	3–7		1.7		184,640		(172,840	)		11,800
Subtotal					1,476,470		(651,894	)		824,576
Trademarks—indefinite life					190,470		—			190,470
Total intangible assets				$	1,666,940	$	(651,894	)	$	1,015,046

Amortization expense for intangible assets was $18.1 million and $24.5 million for the three months ended September 30, 2024 and 2023, respectively. Amortization expense for intangible assets was $62.7 million and $73.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Future amortization expense for the remainder of the year ended December 31, 2024 and the following four years ended December 31 and thereafter for intangible assets as of September 30, 2024 is as follows (in thousands):


Years Ending December 31:

2024		18,114
2025		72,454
2026		72,454
2027		72,454
2028		72,454
Thereafter		453,992
Total	$	761,922

11.

ACCRUED EXPENSES

Accrued expenses as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30,		December 31,
	2024		2023
Compensation	$	33,711	$	54,593
Professional services		6,459		2,183
Software license agreements		4,613		2,233
Sales tax		3,587		2,968
Royalties and licenses		3,505		4,381
Employee insurance benefits		2,938		2,572
Other		2,785		2,548
Total accrued expenses	$	57,598	$	71,478

12.

OTHER LIABILITIES

Other liabilities as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30,		December 31,
	2024		2023
Income taxes payable—non-current	$	3,937	$	3,937
Software license agreements		3,609		1,004
Deferred revenue—non-current		1,770		1,373
Contingent consideration		—		100
Total other liabilities	$	9,316	$	6,414

13.

LONG-TERM DEBT

On September 21, 2021, CCC Intelligent Solutions Inc., an indirect wholly-owned subsidiary of the Company, together with certain of the Company’s subsidiaries acting as guarantors entered into a credit agreement (as amended, the "2021 Credit Agreement").

The proceeds of the 2021 Credit Agreement and cash on hand were used to repay all outstanding borrowings under the Company's previous credit agreement.

The 2021 Credit Agreement consists of an $800.0 million term loan ("Term B Loan") and a revolving credit facility for an aggregate principal amount of $250.0 million (the "2021 Revolving Credit Facility" and together with the Term B Loan, the "2021 Credit Facilities"). The 2021 Revolving Credit Facility has a sublimit of $75.0 million for letters of credit. The Company received proceeds of $798.0 million, net of debt discount of $2.0 million, related to the Term B Loan. As of September 30, 2024 and December 31, 2023, the unamortized debt discount was $1.2 million and $1.4 million, respectively.

The Company incurred $9.8 million in financing costs related to the Term B Loan. These costs were recorded to a contra debt account and are being amortized to interest expense over the term of the Term B Loan using the effective interest method. As of September 30, 2024 and December 31, 2023, the unamortized financing costs were $6.1 million and $7.1 million, respectively.

The Term B Loan requires quarterly principal payments of $2.0 million until June 30, 2028, with the remaining outstanding principal amount required to be paid on the maturity date, September 21, 2028. If the Company's leverage ratio, as defined in the 2021 Credit Agreement, is greater than 3.5, the Term B Loan requires a principal prepayment, subject to certain exceptions, in connection with the receipt of proceeds from certain asset sales, casualty events, and debt issuances by the Company, and up to 50% of annual excess cash flow, as defined in and as further set forth in the 2021 Credit Agreement. When a principal prepayment is required, the prepayment offsets the future quarterly principal payments of the same amount. As of December 31, 2023, the Company's leverage ratio did not exceed the 3.5 threshold and the Company was not subject to the annual excess cash flow calculation and, as such, was not required to make a principal prepayment.

As of September 30, 2024 and December 31, 2023, the amount outstanding on the Term B Loan is $778.0 million and $784.0 million, respectively, of which $8.0 million is classified as current in the accompanying condensed consolidated balance sheets.

Borrowings under the 2021 Credit Facilities bear interest at rates based on the ratio of CCC Intelligent Solutions Inc. and certain of its subsidiaries’ consolidated first lien net indebtedness to consolidated EBITDA for applicable periods specified in the 2021 Credit Agreement.

In May 2023, the Company entered into Amendment No. 1 to the 2021 Credit Agreement (the "First Amendment") to establish the Secured Overnight Financing Rate ("SOFR") as the benchmark rate for determining the applicable interest rate, replacing the London Interbank Offer Rate ("LIBOR"). No other terms, including the amount of borrowings, required payments or maturity date, were changed as a result of the First Amendment. The Company did not incur significant costs associated with the Amendment.

Subsequent to the execution of the First Amendment, the interest rate per annum applicable to the loans is based on a fluctuating rate of interest equal to the sum of an applicable rate and term SOFR (other than with respect to Euros, the Euro Interbank Offer Rate ("EURIBOR") and with respect to British Pounds Sterling, Sterling Overnight Indexed Average ("SONIA")) with a term, as selected by the Company, of one, three or six months (subject to (x) in the case of term loans, a 0.50% per annum floor and (y) in the case of revolving loans, a 0.00% per annum floor).

Prior to the execution of the First Amendment, the interest rate per annum applicable to the loans was based on a fluctuating rate of interest equal to the sum of an applicable rate and, at the Company’s election from time to time, either:

(1)

a base rate determined by reference to the highest of (a) the rate last quoted by the Wall Street Journal as the "prime rate," (b) the federal funds effective rate plus 0.50%, (c) one-month LIBOR plus 1.00% and (d) with respect to the Term B Loan, 1.50% and with respect to the 2021 Revolving Credit Facility, 1.00%, or

(2)

a Eurocurrency rate determined by reference to LIBOR (other than with respect to Euros, EURIBOR and with respect to British Pounds Sterling, SONIA) with a term, as selected by the Company, of one, three or six months (subject to (x) in the case of term loans, a 0.50% per annum floor and (y) in the case of revolving loans, a 0.00% per annum floor).

In September 2024, the Company entered into Amendment No. 2 to the 2021 Credit Agreement (the "Second Amendment") to (i) remove the SOFR credit adjustment applicable to the 2021 Revolving Credit Facility and (ii) reduce the applicable interest rate for the 2021 Revolving Credit Facility by 0.25%. Additionally, the maturity date for the 2021 Revolving Credit Facility was extended to September 23, 2029, subject to a springing maturity date of June 22, 2028 if greater than $234.0 million of the initial Term B Loan remains outstanding as of such date.

At the time of entering into the 2021 Credit Agreement, the Company incurred $3.1 million in financing costs related to the 2021 Revolving Credit Facility. The Company incurred $0.7 million in financing costs related to the Second Amendment. These costs were recorded to a deferred financing fees asset account and are being amortized to interest expense over the term of the 2021 Revolving Credit Facility. As of September 30, 2024 and December 31, 2023, the deferred financing fees asset balance was $1.8 million and $1.7 million, respectively.

A quarterly commitment fee of up to 0.50% is payable on the unused portion of the 2021 Revolving Credit Facility.

During the three months ended September 30, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 7.7%, respectively.

During the nine months ended September 30, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 7.3%, respectively.

The Company has an outstanding standby letter of credit for $0.7 million which reduces the amount available to be borrowed under the 2021 Revolving Credit Facility. As of September 30, 2024 and December 31, 2023, $249.3 million was available to be borrowed.

The terms of the 2021 Credit Agreement include a financial covenant which requires that, at the end of each fiscal quarter, if the aggregate amount of borrowings under the 2021 Revolving Credit Facility exceeds 35% of the aggregate commitments of the Company, the leverage ratio of CCC Intelligent Solutions Inc. and certain of its subsidiaries cannot exceed 6.25 to 1.00. Borrowings under the 2021 Revolving Credit Facility did not exceed 35% of the aggregate commitments and the Company was not subject to the leverage test as of September 30, 2024 or December 31, 2023.

Long-term debt as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30,			December 31,
	2024			2023
Term B Loan	$	778,000		$	784,000
Term B Loan—discount		(1,245	)		(1,436	)
Term B Loan—deferred financing fees		(6,116	)		(7,060	)
Term B Loan—Net of discount & fees		770,639			775,504
Less: Current portion		(8,000	)		(8,000	)
Total long-term debt—Net of current portion	$	762,639		$	767,504

Interest Rate Caps—In August 2022, the Company entered into two interest rate cap agreements to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt.

In May 2023, the Company transitioned the referenced interest rate within the two interest rate cap agreements from LIBOR to SOFR by terminating the original agreements and simultaneously entering into new agreements. The terms of the new agreements were unchanged except for the referenced interest rate.

The interest rate cap agreements have an aggregate notional amount of $600.0 million and a one-month SOFR cap rate of 4.00% through their expiration in July 2025.

Cash received related to the interest rate cap agreements was $2.1 million and $1.9 million for the three months ended September 30, 2024 and 2023, respectively.

Cash received related to the interest rate cap agreements was $6.1million and $4.4 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024 and December 31, 2023, the aggregate fair value of the interest rate cap agreements was $1.4 million and $6.2 million, respectively (see Note 4).

14.

REDEEMABLE NON-CONTROLLING INTEREST

On March 12, 2020 (the "Close Date"), the Company closed a stock purchase agreement (the "Stock Purchase Agreement") with a third-party investor (the "Investor") for purchase by the Investor of Series A Preferred Stock in CCCIS Cayman Holdings Limited ("CCC Cayman"), the parent of the Company’s China operations. On the Close Date, CCC Cayman, a subsidiary of the Company, issued 1,818 shares of Series A Preferred Stock (the "Preferred Shares") at $7,854 per share to the Investor for net proceeds of $14.2 million. As of September 30, 2024 and December 31, 2023, on an as-converted basis, the Preferred Shares represent an aggregate 10.0% ownership interest of the issued and outstanding capital stock of CCC Cayman, or 8.6% on a fully-diluted basis.

The Preferred Shares are redeemable upon an actual or deemed redemption event as defined in the Stock Purchase Agreement or at the option of the Investor beginning on the five-year anniversary of the Close Date, if an actual or deemed redemption event has not yet occurred. The redemption price, as defined by the Stock Purchase Agreement, is equal to the original issue price of the Preferred Shares, plus 10.0% compound interest per annum on the Preferred Share issue price, plus any declared but unpaid dividends on the Preferred Shares.

The Preferred Shares do not participate in net income or losses.

As of September 30, 2024 and December 31, 2023, the Investor’s ownership in CCC Cayman is classified in mezzanine equity as a redeemable non-controlling interest, because it is redeemable on an event that is not solely in the control of the Company.

In May 2023, the Company determined it was probable the non-controlling interest would become redeemable and began to accrete the non-controlling interest to its redemption value. Changes in the carrying value of the non-controlling interest are recorded as adjustments to additional paid-in capital.

The activity impacting the redeemable non-controllable interest during the three and nine months ended September 30, 2024 and 2023 is presented below (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Balance at beginning of period	$	18,947	$	14,494	$	16,584	$	14,179
Accretion of redeemable non-controlling interest		1,320		1,010		3,683		1,325
Balance at end of period	$	20,267	$	15,504	$	20,267	$	15,504

15.

Capital stock

Preferred Stock—The Company is authorized to issue up to 100,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2024, there were no shares of preferred stock issued or outstanding.

Common Stock—The Company is authorized to issue up to 5,000,000,000 shares of common stock with a par value of $0.0001 per share. Each holder of common stock is entitled to one vote for each share of common stock held of record by such holder on all matters voted upon by the stockholders, subject to the restrictions set out in the Company's certificate of incorporation. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors. Upon a liquidation event, subject to the rights of the holders of any preferred stock issued and outstanding at such time, any distribution shall be made on a pro rata basis to the common stockholders.

There were 625,325,706 and 603,128,781 shares of common stock issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.

Secondary Offerings—During the nine months ended September 30, 2024, certain existing stockholders completed secondary offerings where the selling stockholders sold an aggregate of 171.5 million shares of the Company's common stock. The Company did not receive proceeds from the sale of the shares by the selling stockholders.

In connection with secondary offerings, the Company incurred costs of $0.1 and $2.0 million during the three and nine months ended September 30, 2024, respectively, included within general and administrative expenses on the condensed consolidated statement of operations and comprehensive income (loss).

16.

STOCK INCENTIVE PLANS

In July 2021, the 2021 Equity Incentive Plan (the "2021 Plan") was adopted and approved by the Company's board of directors and stockholders.

Restricted Stock Units—The table below summarizes the restricted stock unit ("RSU") activity for the nine months ended September 30, 2024:


				Weighted-
				Average
	Shares			Fair Value
Unvested RSUs—December 31, 2023		36,329,881		$	10.56
Granted		10,371,334			11.85
Vested		(14,007,032	)		10.77
Forfeited		(1,146,672	)		10.57
Unvested RSUs—September 30, 2024		31,547,511			10.89

During the nine months ended September 30, 2024, the Company granted 10,371,334 RSUs, of which 8,099,251 have time-based vesting requirements, and 2,272,083 have performance-based vesting requirements.

During the nine months ended September 30, 2024, 14,007,032 RSUs vested, of which 4,972,134 were withheld for employee tax obligations.

During the year ended December 31, 2023, the Company's board of directors approved modifications to the performance-based RSUs subject to a market condition. The modifications included: (i) the extension of the performance period by one year, (ii) a change to the performance criteria, (iii) a change to the number of units to be issued depending on performance and (iv) for certain grants, imposing a maximum number of units to be issued depending on performance equal to 100% of the target.

The modification to the performance-based RSUs subject to a market condition resulted in incremental stock-based compensation expense of $67.0 million, which is being recognized ratably over the modified performance periods.

Stock Options—The table below summarizes the stock option activity for the nine months ended September 30, 2024:


						Weighted-
						Average
				Weighted-		Remaining		Aggregate
				Average		Contractual		Intrinsic
				Exercise		Life		Value
	Shares			Price		(in years)		(in thousands)
Options outstanding—December 31, 2023		35,788,469		$	2.96		4.0	$	301,563
Exercised		(8,743,936	)		2.74
Forfeited and canceled		(11,920	)		3.40
Options outstanding—September 30, 2024		27,032,613		$	3.04		3.4	$	216,631
Options exercisable—September 30, 2024		26,171,215		$	2.91		3.3	$	212,962
Options vested and expected to vest—September 30, 2024		27,008,353		$	3.03		3.3	$	216,537

The fair value of the options which vested during the nine months ended September 30, 2024 was $2.1 million.

Cayman Equity Incentive Plan—In December 2022, the Company adopted the CCCIS Cayman Holdings Employees Equity Incentive Plans ("Cayman Incentive Plans"), which provide for the issuance of stock option awards in CCC Cayman ("Cayman Awards") to eligible employees of the Company's China subsidiaries.

Awards under the Cayman Incentive Plans are settled in cash and thus accounted for as liability awards. Awards granted under the Cayman Incentive Plans have time-based vesting and expire on the tenth anniversary of the grant date.

During the nine months ended September 30, 2024, the Company granted 761,743 stock options under the Cayman Incentive Plans. The exercise price of the options granted is equal to the fair value of the underlying shares at the grant date. As of September 30, 2024 and December 31, 2023, 2,373,542 and 1,735,900, respectively, of stock options under the Cayman Incentive Plans are outstanding.

Employee Stock Purchase Plan—In July 2021, the Company adopted the CCC 2021 Employee Stock Purchase Plan ("ESPP").

During the nine months ended September 30, 2024, 608,891 shares were sold under the ESPP.

The fair value of the ESPP purchase rights sold during the nine months ended September 30, 2024 was estimated using the Black-Scholes option pricing model with the following assumptions:


Expected term (in years)		0.5
Expected volatility		25%-29%
Expected dividend yield		0%
Risk-free interest rate		5.2%-5.5%

Stock-Based Compensation—Stock-based compensation expense has been recorded in the accompanying condensed consolidated statements of operations and comprehensive income (loss) as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Cost of revenues	$	2,297	$	2,396	$	7,051	$	6,595
Research and development		12,164		6,359		34,750		18,833
Sales and marketing		6,637		9,257		19,150		25,264
General and administrative		21,027		21,739		66,270		53,779
Total stock-based compensation expense	$	42,125	$	39,751	$	127,221	$	104,471

As of September 30, 2024, there was $185.3 million of unrecognized stock compensation expense related to unvested time-based awards which is expected to be recognized over a weighted-average period of 2.6 years. As of September 30, 2024, there was $53.5 million of unrecognized stock-based compensation expense related to unvested performance-based awards which is expected to be recognized over a weighted-average period of 1.2 years.

17.

WARRANTS

Upon consummation of the Business Combination, the Company assumed warrants sold in a private placement ("Private Warrants") issued by Dragoneer.

On May 9, 2024 ("Redemption Date"), the Company redeemed all of the outstanding Private Warrants for an aggregate of 3,809,200 shares of the Company's common stock. The holder of the Private Warrants received 0.214 shares of common stock for each Private Warrant exchanged. No cash was paid by the Company in exchange for the redeemed Private Warrants. The Private Warrants were valued on the Redemption Date using the Black-Scholes option pricing model with the following assumptions:


Expected term (in years)	2.2
Expected volatility	31	%
Expected dividend yield	0	%
Risk-free interest rate	4.80	%

The estimated fair value of each Private Warrant using the Company's stock price on the Redemption Date and above assumptions was $2.09.

Following the redemption, the Company had no Private Warrants outstanding. As of December 31, 2023, the Company had 17,800,000 Private Warrants outstanding.

Due to the redemption in May 2024, the Company did not recognize any income or expense as a change in fair value of warrant liabilities during the three months ended September 30, 2024. The Company recognized expense of $26.2 million as a change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended September 30, 2023.

The Company recognized income of $14.4 million and expense of $45.4 million as a change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2024 and 2023, respectively.

As of December 31, 2023, the Company’s warrant liability was $51.5 million.

18.

COMMITMENTS

Purchase Obligations—The Company has long-term agreements with suppliers and other parties related to licensing data used in its services, outsourced data center, disaster recovery and SaaS that expire at various dates through 2031. During the nine months ended September 30, 2024, the Company entered into purchase agreements with suppliers which include total minimum purchase commitments of $29.6 million, $31.3 million and $50.1 million during the years ending December 31, 2025, 2026 and 2027, respectively. As of September 30, 2024, there were no other material changes from the amounts disclosed as of December 31, 2023.

Guarantees—The Company’s services and solutions are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and substantially in accordance with the Company’s services and solutions documentation under normal use and circumstances. The Company’s services and solutions are generally warranted to be performed in a professional manner and to materially conform to the specifications set forth in the related customer contract. The Company’s arrangements also include certain provisions for indemnifying customers against liabilities, subject to customary limitations, if its services and solutions infringe a third party’s intellectual property rights.

To date, the Company has not incurred any material costs as a result of such indemnifications or commitments and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

Employment Agreements—The Company is a party to employment agreements with key employees that provide for compensation and certain other benefits. These agreements also provide for severance and bonus payments under certain circumstances.

19.

LEGAL PROCEEDINGS AND CONTINGENCIES

In the ordinary course of business, the Company is from time to time, involved in various pending or threatened legal actions. The litigation process is inherently uncertain, and it is possible that the resolution of such matters might have a material adverse effect upon the Company’s consolidated financial condition and/or results of operations. The Company’s management believes, based on current information, matters currently pending or threatened are not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

20.

ReLATED PARTIES

The Company has engaged in transactions within the ordinary course of business with entities affiliated with its principal equity owners and directors.

The following table summarizes revenues recognized and expenses incurred with entities affiliated with one of its principal equity owners and directors for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues
Credit card processing	$	379	$	278	$	982	$	786
Expenses
Employee health insurance benefits		691		663		2,544		2,484
Board of director fees for services, including related travel and out-of-pocket reimbursements	*			77		328		230
IT security software		128	*			383	*
Human resources support services	^			69	^			248

* Not significant.

^ As of September 30, 2024, the entity which provides human resources support services is no longer a related party.

The Company had a related party payable due to its employee health insurance benefits vendor for $0.2 million and $0.5 million as of September 30, 2024 and December 31, 2023, respectively.

21.

OTHER (EXPENSE) INCOME—NET

Other (expense) income—Net consists of the following (in thousands):


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
(Loss) gain from change in fair value of derivative instruments	$	(4,641	)	$	(446	)	$	(4,775	)	$	563
Income from derivative instruments		2,055			—			6,094			—
Other (expense) income—Net		(1	)		182			287			551
Total other (expense) income—Net	$	(2,587	)	$	(264	)	$	1,606		$	1,114

22.

NET INCOME (LOSS) PER SHARE

The Company calculates basic earnings per share by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. The diluted earnings per share is computed by assuming the exercise, settlement and vesting of all potential dilutive common stock equivalents outstanding for the period using the treasury stock method. The Company excludes common stock equivalent shares from the calculation if their effect is anti-dilutive. In a period where the Company is in a net loss position, the diluted loss per share is calculated using the basic share count.

The following table sets forth a reconciliation of the numerator and denominator used to compute basic and diluted earnings per share of common stock (in thousands, except for share and per share data).


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Numerator
Net income (loss)	$	4,132		$	(21,202	)	$	24,980		$	(116,362	)
Accretion of redeemable non-controlling interest		(1,320	)		(1,010	)		(3,683	)		(1,325	)
Net income (loss) attributable to common stockholders	$	2,812		$	(22,212	)	$	21,297		$	(117,687	)

Denominator
Weighted average shares of common stock—basic		615,857,231			624,976,557			608,073,087			620,841,922
Dilutive effect of stock-based awards		26,547,286			—			30,996,404			—
Weighted average shares of common stock—diluted		642,404,517			624,976,557			639,069,491			620,841,922
Net income (loss) per share:
Basic	$	0.00		$	(0.04	)	$	0.04		$	(0.19	)
Diluted	$	0.00		$	(0.04	)	$	0.03		$	(0.19	)

Approximately 344,640 and 32,593,648 common stock equivalent shares were excluded from the computation of diluted per share amounts for the three months ended September 30, 2024 and 2023, respectively, because their effect was anti-dilutive.

Approximately 57,487 and 31,454,944 common stock equivalent shares were excluded from the computation of diluted per share amounts for the nine months ended September 30, 2024 and 2023, respectively, because their effect was anti-dilutive.

As part of the Business Combination, 8,625,000 shares issued and held by Dragoneer (the "Sponsor Vesting Shares") became non-transferable and subject to forfeiture on the tenth anniversary of the closing of the Business Combination if neither of the defined triggering events has occurred. The Sponsor Vesting Shares are issued and outstanding as of September 30, 2024 and December 31, 2023 and excluded from the weighted average number of shares of common stock outstanding until the vesting requirement is met and the restriction is removed.

23.

SEGMENT INFORMATION and information about geographic areas

The Company operates in one operating segment. The chief operating decision maker for the Company is the chief executive officer. The chief executive officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by type of service and geographic region, for purposes of allocating resources and evaluating financial performance.

Revenues by geographic area, presented based upon the location of the customer are as follows (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
United States	$	236,761	$	219,573	$	693,322	$	632,572
China		1,720		1,574		5,014		5,205
Total revenues	$	238,481	$	221,147	$	698,336	$	637,777

Software, equipment and property—Net by geographic area are as follows (in thousands):


	September 30,		December 31,
	2024		2023
United States	$	178,236	$	160,064
China		226		352
Total software, equipment and property—Net	$	178,462	$	160,416

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the forward-looking statements included herein. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" as set forth elsewhere in this Quarterly Report on Form 10-Q.

Unless otherwise indicated or the context otherwise requires, references to "CCC," the "Company," "we," "us," "our" and other similar terms refer to CCC Intelligent Solutions Holdings Inc. and its consolidated subsidiaries.

Business Overview

Founded in 1980, CCC is a leading SaaS platform for the multi-trillion-dollar P&C insurance economy powering operations for insurers, repairers, automakers, part suppliers, lenders and more. CCC cloud technology connects more than 35,000 businesses digitizing mission-critical workflows, commerce and customer experiences. A trusted leader in AI, Internet of Things ("IoT"), customer experience, network and workflow management, CCC delivers innovations that keep people's lives moving forward when it matters most.

Our business has been built upon two foundational pillars: automotive insurance claims and automotive collision repair. For decades we have delivered leading software solutions to both the insurance and repair industries, including pioneering Direct Repair Programs ("DRP") in the U.S. beginning in 1992. DRP connects auto insurers and collision repair shops to create business value for both parties, and requires digital tools to facilitate interactions and manage partner programs. Insurer-to-shop DRP connections have created a strong network effect for CCC’s platform, as insurers and repairers both benefit by joining the largest network to maximize opportunities. This has led to a virtuous cycle in which more insurers on the platform drives more value for the collision shops on the platform, and vice versa.

We believe we have become a leading insurance and repair SaaS provider in the U.S. by increasing the depth and breadth of our SaaS offerings over many years. Our insurance solutions help insurance carriers manage mission-critical workflows across the claims lifecycle, while building smart, dynamic experiences for their own customers. Our software integrates seamlessly with both legacy and modern systems alike and enables insurers to rapidly innovate on our platform. Our repair solutions help collision repair facilities achieve better performance throughout the collision repair cycle by digitizing processes to drive business growth, streamline operations and improve repair quality. We have more than 300 insurers on our network, connecting with more than 30,000 repair facilities through our multi-tenant cloud platform. We believe our software is the architectural backbone of insurance DRP systems and is a primary driver of material revenue for our collision shop customers and a source of material efficiencies for our insurance carrier customers.

Our platform is designed to solve the "many-to-many" problem faced by the insurance economy. There are numerous internally and externally developed insurance software solutions in the market today, with the vast majority of applications focused on insurance-only use cases and not on serving the broader insurance ecosystem. We have prioritized building a leading network around our automotive insurance and collision repair pillars to further digitize interactions and maximize value for our customers. We have tens of thousands of companies on our platform that participate in the insurance economy, including insurers, repairers, parts suppliers, automotive manufacturers, and financial institutions. Our solutions create value for each of these parties by enabling them to connect to our vast network to collaborate with other companies, streamline operations, and reduce processing costs and dollars lost through claims management inefficiencies, or claims leakage. Expanding our platform has added new layers of network effects, further accelerating the adoption of our software solutions.

We have processed more than $1 trillion of historical data across our network, allowing us to build proprietary data assets that leverage insurance claims, vehicle repair, automotive parts and other vehicle-specific information. We believe we are uniquely positioned to provide data-driven insights, analytics and AI-enhanced workflows that strengthen our solutions and improve business outcomes for our customers. Our AI solutions increase automation across existing insurance and repair processes including vehicle damage detection, claim triage, claim handling, repair estimating, intelligent claim review and claim subrogation. We deliver real-world AI with more than 100 U.S. auto insurers and more than 11,000 U.S. collision repairers actively using AI-powered solutions in production environments.

One of the primary obstacles facing the P&C insurance economy is increasing complexity. Complexity in the P&C insurance economy is driven by technological advancements, IoT data, new business models, supply chain disruption and changing consumer expectations. We believe digitization plays a critical role in managing this growing complexity while meeting consumer expectations. Our technology investments are focused on digitizing complex processes and interactions across our ecosystem, and we believe we are well positioned to power the P&C insurance economy of the future with our data, network and platform.

While our position in the P&C insurance economy is grounded in the automotive insurance sector, the largest insurance sector in the U.S. representing nearly half of direct written premiums ("DWP"), we believe our integrations and cloud platform are capable of driving innovation across the entire P&C insurance economy. Our customers are increasingly looking for CCC to expand its solutions to other parts of their business where they can benefit from our technology, service and partnership. In response, we are investing in new solutions that we believe will enable us to digitize the entire automotive claims lifecycle, and over time expand into adjacencies including other insurance lines.

We have strong customer relationships in the end-markets we serve, and these relationships are a key component of our success given the long-term nature of our contracts and the interconnectedness of our network. We have customer agreements with more than 300 insurers (including carriers, self-insurers and other entities processing insurance claims), including 27 of the top 30 automotive insurance carriers in the U.S., based on DWP, and hundreds of regional carriers. We have more than 35,000 total customers, including more than 30,000 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), more than 5,500 parts suppliers, 13 of the top 15 automotive manufacturers based on new vehicle sales, and numerous other companies that participate in the P&C insurance economy.

Key Performance Measures and Operating Metrics

In addition to our GAAP and non-GAAP financial measures, we rely on Software Net Dollar Retention Rate ("Software NDR") and Software Gross Dollar Retention Rate ("Software GDR") to measure and evaluate our business to make strategic decisions. Software NDR and Software GDR may not be comparable to or calculated in the same way as other similarly titled measures used by other companies.

Software NDR

We believe that Software NDR provides our management and our investors with insight into our ability to retain and grow revenue from our existing customers, as well as their potential long-term value to us. We also believe the results shown by this metric reflect the stability of our revenue base, which is one of our core competitive strengths. We calculate Software NDR by dividing (a) annualized software revenue recorded in the last month of the measurement period, for example, March for a quarter ending March 31, for unique billing accounts that generated revenue during the corresponding month of the prior year by (b) annualized software revenue as of the corresponding month of the prior year. The calculation includes changes for these billing accounts, such as changes in the solutions purchased, changes in pricing and transaction volume, but does not reflect revenue for new customers added. The calculation excludes: (a) changes in estimates related to the timing of one-time revenue and other revenue, including professional services, and (b) annualized software revenue for smaller customers with annualized software revenue below the threshold of $100,000 for carriers and $4,000 for shops. The customers that do not meet the revenue threshold are small carriers and shops that tend to have different buying behaviors, with a narrower solution focus, and different tenure compared to our core customers (excluded small carriers and shops represent less than 5% of total revenue within these sales channels). Our Software NDR includes carriers and shops who subscribe to our auto physical damage solutions, which account for most of the Company’s revenue, and excludes revenue from smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and also excludes CCC casualty solutions which are largely usage and professional service based.


	Quarter Ending	2024	2023
Software NDR	March 31	107%	106%
	June 30	107%	107%
	September 30	106%	107%
	December 31		108%

Software GDR

We believe that Software GDR provides our management and our investors with insight into the value our solutions provide to our customers as represented by our ability to retain our existing customer base. We believe the results shown by this metric reflect the strength and stability of our revenue base, which is one of our core competitive strengths. We calculate Software GDR by dividing (a) annualized software revenue recorded in the last month of the measurement period in the prior year, reduced by annualized software revenue for unique billing accounts that are no longer customers as of the current period end by (b) annualized software revenue as of the corresponding month of the prior year. The calculation reflects only customer losses and does not reflect customer expansion or contraction for these billing accounts and does not reflect revenue for new customer billing accounts added. Our Software GDR calculation represents our annualized software revenue that is retained from the prior year and demonstrates that the vast majority of our customers continue to use our solutions and renew their subscriptions. The calculation excludes: (a) changes in estimates related to the timing of one-time revenue and other revenue, including professional services, and (b) annualized software revenue for smaller customers with annualized software revenue below the threshold of $100,000 for carriers and $4,000 for shops.

The customers that do not meet the revenue threshold are small carriers and shops that tend to have different buying behaviors, with a narrower solution focus, and different tenure compared to our core customers (excluded small carriers and shops which represent less than 5% of total revenue within these sales channels). Our Software GDR includes carriers and shops who subscribe to our auto physical damage solutions, which account for most of the Company’s revenue, and excludes revenue from smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and excludes CCC casualty solutions which are largely usage and professional service based.


	Quarter Ending	2024	2023
Software GDR	March 31	99%	99%
	June 30	99%	99%
	September 30	99%	98%
	December 31		99%

Results of Operations

Comparison of the three months ended September 30, 2024 to the three months ended September 30, 2023


	Three Months Ended September 30,
(dollar amounts in thousands, except share and per share data)	2024			2023			$			%

Revenues	$	238,481		$	221,147		$	17,334			7.8	%
Cost of revenues, exclusive of amortization of acquired technologies		54,890			51,459			3,431			6.7	%
Amortization of acquired technologies		171			6,567			(6,396	)		-97.4	%
Cost of revenues(1)		55,061			58,026			(2,965	)		-5.1	%
Gross profit		183,420			163,121			20,299			12.4	%
Operating expenses:
Research and development(1)		49,525			43,532			5,993			13.8	%
Selling and marketing(1)		34,347			35,605			(1,258	)		-3.5	%
General and administrative(1)		52,918			49,471			3,447			7.0	%
Amortization of intangible assets		17,942			17,942			—			0.0	%
Total operating expenses		154,732			146,550			8,182			5.6	%
Operating income (loss)		28,688			16,571			12,117			73.1	%
Other (expense) income:
Interest expense		(16,379	)		(14,633	)		(1,746	)		-11.9	%
Interest income		3,343			5,165			(1,822	)		-35.3	%
Change in fair value of warrant liabilities		—			(26,223	)		26,223			100.0	%
Other expense—Net		(2,587	)		(264	)		(2,323	)		-878.1	%
Total other (expense) income		(15,623	)		(35,955	)		20,332			56.5	%
Pretax income (loss)		13,065			(19,384	)		32,449		NM
Income tax provision		(8,933	)		(1,818	)		(7,115	)		-391.4	%
Net income (loss) including non-controlling interest		4,132			(21,202	)		25,334		NM
Less: accretion of redeemable non-controlling interest		(1,320	)		(1,010	)		(310	)		-30.7	%
Net income (loss) attributable to CCC Intelligent Solutions Holdings Inc. common stockholders	$	2,812		$	(22,212	)	$	25,024		NM
Net income (loss) per share attributable to common stockholders:
Basic	$	0.00		$	(0.04	)
Diluted	$	0.00		$	(0.04	)

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Basic		615,857,231			624,976,557
Diluted		642,404,517			624,976,557
NM—Not Meaningful

(1) Includes stock-based compensation expense as follows (in thousands):
	Three Months Ended September 30,
	2024			2023
Cost of revenues	$	2,297		$	2,396
Research and development		12,164			6,359
Sales and marketing		6,637			9,257
General and administrative		21,027			21,739
Total stock-based compensation expense	$	42,125		$	39,751

Revenues

Revenues increased by $17.3 million to $238.5 million, or 7.8%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The Company's software subscription revenues accounted for $229.4 million and $212.5 million, or 96% of total revenue during the three months ended September 30, 2024 and 2023.

The increase in revenue was primarily a result of 5% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.

Cost of Revenues

Cost of revenues decreased by $3.0 million to $55.1 million, or 5.1%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Cost of Revenues, exclusive of amortization of acquired technologies

Cost of revenues, exclusive of amortization of acquired technologies, increased by $3.4 million to $54.9 million, or 6.7%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily due to a $1.4 million increase in information technology ("IT") related costs, a $1.2 million increase in third party fees and direct costs associated with our revenue growth, and a $1.0 million increase in personnel-related costs, including stock-based compensation.

Amortization of Acquired Technologies

Amortization of acquired technologies decreased $6.4 million to $0.2 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease was due to certain acquired technology intangible assets reaching the end of their useful life in April 2024.

Gross Profit

Gross profit increased by $20.3 million to $183.4 million, or 12.4%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Our gross profit margin was 76.9% for the three months ended September 30, 2024, compared to 73.8% for the three months ended September 30, 2023. The increase in gross profit and gross profit margin was due to increased software subscription revenues, economies of scale resulting from fixed cost arrangements, and lower amortization of acquired technologies.

Research and Development

Research and development expense increased by $6.0 million to $49.5 million, or 13.8%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily due to a $5.8 million increase in stock-based compensation and a $2.4 million increase in IT related costs, partially offset by a $2.2 million decrease in personnel and resource costs.

Selling and Marketing

Selling and marketing expense decreased by $1.3 million to $34.3 million, or 3.5%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease was due to a $2.6 million decrease in stock-based compensation and a $0.6 million decrease in marketing and event costs, partially offset by a $2.2 million increase in personnel-related costs.

General and Administrative

General and administrative expense increased by $3.4 million to $52.9 million, or 7.0%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily due to a $2.7 million increase in professional service costs and a $0.9 million increase in IT related costs.

Amortization of Intangible Assets

Amortization of intangible assets was $17.9 million for the three months ended September 30, 2024 and 2023, respectively.

Interest Expense

Interest expense increased by $1.7 million to $16.4 million, or 11.9%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily due to higher variable interest rates during the three months ended September 30, 2024.

Interest Income

Interest income decreased by $1.8 million to $3.3 million, or 35.3%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due to lower average balances on interest earning deposits and money market funds during the three months ended September 30, 2024.

Change in Fair Value of Warrant Liabilities

Due to the redemption of all outstanding warrants in May 2024, the Company did not recognize any income or expense as a change in fair value of warrant liabilities during the three months ended September 30, 2024. We recognized an expense of $26.2

million for the three months ended September 30, 2023. The change in fair value of warrant liabilities was primarily due to changes in the price of the Company's common stock during the reporting period.

Other Expense—Net

We recognized other expense—net of $2.6 million for the three months ended September 30, 2024 compared to $0.3 million for the three months ended September 30, 2023. The change was primarily due to the change in fair value of the interest rate cap derivative instruments during each period, driven by changes in the forward yield curves and time to maturity, and the income recognized from the interest rate cap derivative instruments during the three months ended September 30, 2024.

Income Tax Provision

The Company recognized an income tax provision of $8.9 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively. The income tax provision during the three months ended September 30, 2024 was primarily due to the Company's pre-tax book income. The income tax provision for the three months ended September 30, 2023 was primarily due to the tax treatment of the loss on the change in the fair value of warrant liabilities.

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023


	Nine Months Ended September 30,
(dollar amounts in thousands, except share and per share data)	2024			2023			$			%
Revenue	$	698,336		$	637,777		$	60,559			9.5	%
Cost of revenue, exclusive of amortization and impairment of acquired technologies		160,929			153,954			6,975			4.5	%
Amortization of acquired technologies		8,828			19,897			(11,069	)		-55.6	%
Impairment of acquired technologies		—			431			(431	)		-100.0	%
Cost of revenues(1)		169,757			174,282			(4,525	)		-2.6	%
Gross profit		528,579			463,495			65,084			14.0	%
Operating expenses:
Research and development(1)		148,255			127,891			20,364			15.9	%
Selling and marketing(1)		106,254			105,072			1,182			1.1	%
General and administrative(1)		161,247			137,477			23,770			17.3	%
Amortization of intangible assets		53,826			54,030			(204	)		-0.4	%
Impairment of goodwill		—			77,405			(77,405	)		-100.0	%
Impairment of intangible assets		—			4,906			(4,906	)		-100.0	%
Total operating expenses		469,582			506,781			(37,199	)		-7.3	%
Operating income (loss)		58,997			(43,286	)		102,283		NM
Other (expense) income:
Interest expense		(49,434	)		(42,480	)		(6,954	)		-16.4	%
Interest income		8,435			12,447			(4,012	)		-32.2	%
Change in fair value of warrant liabilities		14,378			(45,403	)		59,781		NM
Other income—Net		1,606			1,114			492			44.3	%
Total other (expense) income		(25,015	)		(74,322	)		49,307			66.3	%
Pretax income (loss)		33,982			(117,608	)		151,590		NM
Income tax (provision) benefit		(9,002	)		1,246			(10,248	)	NM
Net income (loss) including non-controlling interest		24,980			(116,362	)		141,342		NM
Less: accretion of redeemable non-controlling interest		(3,683	)		(1,325	)		(2,358	)		-178.0	%
Net income (loss) attributable to CCC Intelligent Solutions Holdings Inc. Common Stockholders	$	21,297		$	(117,687	)	$	138,984		NM
Net income (loss) per share attributable to common stockholders:
Basic	$	0.04		$	(0.19	)
Diluted	$	0.03		$	(0.19	)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Basic		608,073,087			620,841,922
Diluted		639,069,491			620,841,922

(1) Includes stock-based compensation expense as follows (in thousands):
	Nine Months Ended September 30,
	2024			2023
Cost of revenues	$	7,051		$	6,595
Research and development		34,750			18,833
Sales and marketing		19,150			25,264
General and administrative		66,270			53,779
Total stock-based compensation expense	$	127,221		$	104,471

Revenues

Revenues increased by $60.6 million to $698.3 million, or 9.5%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The Company's software subscription revenues accounted for $670.3 million and $611.6 million, or 96% of total revenue during the nine months ended September 30, 2024 and 2023.

The increase in revenue was primarily a result of 7% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.

Cost of Revenues

Cost of revenues decreased by $4.5 million to $169.8 million, or 2.6%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Cost of Revenues, exclusive of amortization and impairment of acquired technologies

Cost of revenues, exclusive of amortization and impairment of acquired technologies, increased by $7.0 million to $160.9 million, or 4.5%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was primarily due to a $4.2 million increase in third party fees and direct costs associated with our revenue growth, a $1.7 million increase in personnel-related costs, including stock-based compensation, and a $1.6 million increase in depreciation expense related to additional investments in platform and customer solution enhancements, partially offset by a $0.6 million decrease in IT related costs.

Amortization of Acquired Technologies

Amortization of acquired technologies decreased by $11.1 million to $8.8 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease was due to certain acquired technology intangible assets reaching the end of their useful life in April 2024.

Impairment of Acquired Technologies

There was no impairment charge recognized during the nine months ended September 30, 2024. Impairment of acquired technologies was $0.4 million for the nine months ended September 30, 2023 due to an impairment charge recognized as a result of a downward revision of projected earnings and cash flows of our China reporting unit.

Gross Profit

Gross profit increased by $65.1 million to $528.6 million, or 14.0%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Our gross profit margin was 75.7% for the nine months ended September 30, 2024, compared to 72.7% for the nine months ended September 30, 2023. The increase in gross profit and gross profit margin was due to increased software subscription revenues, economies of scale resulting from fixed cost arrangements and lower amortization of acquired technologies.

Research and Development

Research and development expense increased by $20.4 million to $148.3 million, or 15.9%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due to a $15.9 million increase in stock-based compensation, and a $7.5 million increase in IT related costs, partially offset by a $1.1 million decrease in consulting and professional service costs, a $0.9 million decrease in personnel and resource costs, and a $0.5 million increase in the amount of capitalized time on platform and customer solution enhancements.

Selling and Marketing

Selling and marketing expense increased by $1.2 million to $106.3 million, or 1.1%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due to a $6.4 million increase in personnel-related costs, including sales incentives and travel costs and a $0.9 million increase in marketing related expenses, partially offset by a $6.1 million decrease in stock-based compensation.

General and Administrative

General and administrative expense increased by $23.8 million to $161.2 million, or 17.3%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due to a $16.3 million increase in personnel-related costs, including a $12.5 million increase in stock-based compensation, a $3.9 million increase in professional service costs and a $3.0 million increase in IT related costs.

Amortization of Intangible Assets

Amortization of intangible assets was $53.8 million and $54.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Impairment of Goodwill and Intangible Assets

There was no impairment charge recognized during the nine months ended September 30, 2024. We recorded impairment charges of goodwill and intangible assets of $77.4 million and $4.9 million, respectively, for the nine months ended September 30, 2023. The impairment charges were the result of lower forecasted earnings and cash flows for the Company’s China reporting unit.

Interest Expense

Interest expense increased by $7.0 million to $49.4 million, or 16.4%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due to higher variable interest rates during the nine months ended September 30, 2024.

Interest Income

Interest income decreased by $4.0 million to $8.4 million, or 32.2%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due to lower average balances on interest earning deposits and money market funds during the nine months ended September 30, 2024.

Change in Fair Value of Warrant Liabilities

We recognized income of $14.4 million from a change in fair value of warrant liabilities for the nine months ended September 30, 2024, compared to expense of $45.4 million for the nine months ended September 30, 2023. The change in fair value of warrant liabilities was primarily due to changes in the price of the Company's common stock during each respective period. In May 2024, the Company redeemed the outstanding warrants and as of September 30, 2024, no warrants remain outstanding.

Other Income—Net

We recognized other income—net of $1.6 million for the nine months ended September 30, 2024 compared to $1.1 million for the nine months ended September 30, 2023. The change was primarily due to the change in fair value of the interest rate cap derivative instruments during each period, driven by changes in the forward yield curves and time to maturity, and the income recognized from the interest rate cap derivative instruments during the nine months ended September 30, 2024.

Income Tax (Provision) Benefit

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe that Adjusted Gross Profit, Adjusted Operating Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share, and Free Cash Flow, which are each non-GAAP measures, are useful in evaluating our operational performance. We use this non-GAAP financial information to evaluate our ongoing operations and for internal planning, budgeting and forecasting purposes and setting management bonus programs. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance and comparing our performance with competitors and other comparable companies, which may present similar non-GAAP financial measures to investors. Our computation of these non-GAAP measures may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate these measures in the same fashion. We endeavor to compensate for the limitation of the non-GAAP measure presented by also providing the most directly comparable GAAP measure and a description of the reconciling items and adjustments to derive the non-GAAP measure. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures on a supplemental basis.

Adjusted Gross Profit

We believe that Adjusted Gross Profit, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Gross Profit is defined as gross profit, adjusted for amortization of acquired technologies, impairment of acquired technologies, and stock-based compensation and related employer payroll tax, which are not indicative of our recurring core business operating results. Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by Revenue.

The following table reconciles Gross Profit to Adjusted Gross Profit for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
(amounts in thousands, except percentages)	2024			2023			2024			2023
Gross Profit	$	183,420		$	163,121		$	528,579		$	463,495
Amortization of acquired technologies		171			6,567			8,828			19,897
Stock-based compensation and related employer payroll tax		2,337			2,432			7,617			6,906
Impairment of acquired technologies		—			—			—			431
Adjusted Gross Profit	$	185,928		$	172,120		$	545,024		$	490,729
Gross Profit Margin		77	%		74	%		76	%		73	%
Adjusted Gross Profit Margin		78	%		78	%		78	%		77	%

Adjusted Operating Expenses

We believe that Adjusted Operating Expenses, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Expenses is defined as operating expenses adjusted for amortization of intangible assets, impairment of goodwill, impairment of intangible assets, stock-based compensation expense and related employer payroll tax, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential mergers and acquisitions ("M&A") and costs related to equity transactions, including secondary offerings.

The following table reconciles operating expenses to Adjusted Operating Expenses for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
(dollar amounts in thousands)	2024			2023			2024			2023
Operating expenses	$	154,732		$	146,550		$	469,582		$	506,781
Amortization of intangible assets		(17,942	)		(17,942	)		(53,826	)		(54,030	)
Stock-based compensation expense and related employer payroll tax		(40,306	)		(37,778	)		(125,827	)		(100,577	)
Litigation costs		(1,614	)		(1,396	)		(3,813	)		(3,918	)
Equity transaction costs, including secondary offerings		(137	)		—			(1,876	)		—
M&A and integration costs		—			—			(477	)		—
Impairment of goodwill		—			—			—			(77,405	)
Impairment of intangible assets		—			—			—			(4,906	)
Adjusted operating expenses	$	94,733		$	89,434		$	283,763		$	265,945

Adjusted Operating Income

We believe that Adjusted Operating Income, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Income is defined as operating income (loss) adjusted for amortization of intangible assets and acquired technologies, impairment of goodwill, impairment of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings.

The following table reconciles operating income (loss) to Adjusted Operating Income for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollar amounts in thousands)	2024		2023		2024		2023
Operating income (loss)	$	28,688	$	16,571	$	58,997	$	(43,286	)
Amortization of intangible assets		17,942		17,942		53,826		54,030
Amortization of acquired technologies—Cost of revenue		171		6,567		8,828		19,897
Stock-based compensation expense and related employer payroll tax		42,643		40,210		133,444		107,483
Litigation costs		1,614		1,396		3,813		3,918
Equity transaction costs, including secondary offerings		137		—		1,876		—
M&A and integration costs		—		—		477		—
Impairment of goodwill		—		—		—		77,405
Impairment of intangible assets		—		—		—		4,906
Impairment of acquired technologies - Cost of revenue		—		—		—		431
Adjusted operating income	$	91,195	$	82,686	$	261,261	$	224,784

Adjusted EBITDA

We believe that Adjusted EBITDA, as defined below, is useful in evaluating our operational performance distinct and apart from financing costs, certain expenses and non-operational expenses. Adjusted EBITDA is defined as net income (loss) adjusted for interest, taxes, amortization of intangible assets and acquired technologies, depreciation, stock-based compensation expense and related employer payroll tax, impairment of goodwill, impairment of acquired technologies and intangible assets, change in fair value of warrant liabilities, change in fair value of derivative instruments, income from derivative instruments, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.

The following table reconciles net income (loss) to Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
(dollar amounts in thousands)	2024			2023			2024			2023
Net income (loss)	$	4,132		$	(21,202	)	$	24,980		$	(116,362	)
Interest expense		16,379			14,633			49,434			42,480
Interest income		(3,343	)		(5,165	)		(8,435	)		(12,447	)
Income tax (benefit) provision		8,933			1,818			9,002			(1,246	)
Amortization of intangible assets		17,942			17,942			53,826			54,030
Amortization of acquired technologies—Cost of revenue		171			6,567			8,828			19,897
Depreciation and amortization of software, equipment and property		2,291			2,117			6,455			6,531
Depreciation and amortization of software, equipment and property—Cost of revenue		8,069			7,942			23,065			21,494
Stock-based compensation expense and related employer payroll tax		42,643			40,210			133,444			107,483
Change in fair value of derivative instruments		4,641			446			4,775			(563	)
Income from derivative instruments		(2,055	)		—			(6,094	)		—
Litigation costs		1,614			1,396			3,813			3,918
Equity transaction costs, including secondary offerings		137			—			1,876			—
Change in fair value of warrant liabilities		—			26,223			(14,378	)		45,403
M&A and integration costs		—			—			477			—
Impairment of goodwill		—			—			—			77,405
Impairment of intangible assets		—			—			—			4,906
Impairment of acquired technologies - Cost of Revenue		—			—			—			431
Adjusted EBITDA	$	101,554		$	92,927		$	291,068		$	253,360
Adjusted EBITDA Margin		43	%		42	%		42	%		40	%

Adjusted Net Income and Adjusted Earnings Per Share

We believe that Adjusted Net Income, as defined below, and Adjusted Earnings Per Share are useful in evaluating our operational performance distinct and apart from financing costs, certain expenses and non-operational expenses. Adjusted Net Income is defined as net income (loss) adjusted for the after-tax effects of amortization of intangible assets and acquired technologies, impairment of goodwill, impairment of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, change in fair value of warrant liabilities, change in fair value of derivative instruments, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings.

The following table reconciles net income (loss) to Adjusted Net Income and Adjusted Earnings per Share for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
(dollar amounts in thousands)	2024			2023			2024			2023
Net income (loss)	$	4,132		$	(21,202	)	$	24,980		$	(116,362	)
Amortization of intangible assets		17,942			17,942			53,826			54,030
Amortization of acquired technologies—Cost of revenue		171			6,567			8,828			19,897
Stock-based compensation expense and related employer payroll tax		42,643			40,210			133,444			107,483
Change in fair value of derivative instruments		4,641			446			4,775			(563	)
Litigation costs		1,614			1,396			3,813			3,918
Equity transaction costs, including secondary offerings		137			—			1,876			—
Change in fair value of warrant liabilities		—			26,223			(14,378	)		45,403
M&A and integration costs		—			—			477			—
Impairment of goodwill		—			—			—			77,405
Impairment of intangible assets		—			—			—			4,906
Impairment of acquired technologies-cost revenue		—			—			—			431
Tax effect of adjustments		(8,700	)		(14,421	)		(44,084	)		(45,054	)
Adjusted net income	$	62,580		$	57,161		$	173,557		$	151,494
Adjusted net income per share attributable to common stockholders:
Basic	$	0.10		$	0.09		$	0.29		$	0.24
Diluted	$	0.10		$	0.09		$	0.27		$	0.23
Weighted average shares outstanding:
Basic		615,857,231			624,976,557			608,073,087			620,841,922
Diluted		642,404,517			657,570,205			639,069,491			652,296,866

Free Cash Flow

We believe that Free Cash Flow, as defined below, provides meaningful supplemental information regarding our ability to generate cash and fund our operations and capital expenditures. Free Cash Flow is defined as net cash provided by operating activities less cash used for the purchases of software, equipment, and property.

The following table reconciles net cash provided by operating activities to Free Cash Flow for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
(dollar amounts in thousands)	2024			2023			2024			2023
Net cash provided by operating activities	$	63,232		$	60,506		$	170,241		$	163,138
Purchases of software, equipment, and property		(13,849	)		(14,103	)		(45,073	)		(43,187	)
Free Cash Flow	$	49,383		$	46,403		$	125,168		$	119,951

Liquidity and Capital Resources

We have financed our operations with cash flows from operations. The Company generated $170.2 million of cash flows from operating activities during the nine months ended September 30, 2024. As of September 30, 2024, the Company had cash and cash equivalents of $286.3 million, a working capital surplus of $320.9 million and an accumulated deficit totaling $1,101.5 million. As of September 30, 2024, the Company had $778.0 million aggregate principal outstanding on its term loan.

We believe that our existing cash and cash equivalents, our cash flows from operating activities and our borrowing capacity under our 2021 Revolving Credit Facility will be sufficient to fund our operations, fund required long-term debt repayments and meet our commitments for capital expenditures for at least the next twelve months.

Although we are not currently a party to any material definitive agreement regarding potential investments in, or acquisitions of, complementary businesses, applications or technologies, we may enter into these types of arrangements, which could reduce our cash and cash equivalents or require us to seek additional equity or debt financing. Additional funds from financing arrangements may not be available on terms favorable to us or at all.

Debt

On September 21, 2021, CCC Intelligent Solutions Inc., an indirect wholly owned subsidiary of the Company, together with certain of the Company’s subsidiaries acting as guarantors entered into a credit agreement (as amended, the "2021 Credit Agreement").

The proceeds of the 2021 Credit Agreement and cash on hand were used to repay all outstanding borrowings under the Company's previous credit agreement.

The Term B Loan requires quarterly principal payments of $2.0 million until June 30, 2028, with the remaining outstanding principal amount required to be paid on the maturity date, September 21, 2028. If the Company's leverage ratio, as defined in the 2021 Credit Agreement is greater than 3.5, the Term B Loan requires a principal prepayment, subject to certain exceptions, in connection with the receipt of proceeds from certain asset sales, casualty events and debt issuances by the Company, and up to 50% of annual excess cash flow, as defined in and as further set forth in the 2021 Credit Agreement. When a principal prepayment is required, the prepayment offsets the future quarterly principal payments of the same amount. As of December 31, 2023, the Company's leverage ratio did not exceed the 3.5 threshold and the Company was not subject to the annual excess cash flow calculation and, as such, was not required to make a principal prepayment.

As of September 30, 2024, the amount outstanding on the Term B Loan was $778.0 million, of which, $8.0 million is classified as current.

(1)

(2)

to September 23, 2029, subject to a springing maturity date of June 22, 2028 if greater than $234.0 million of the initial Term B Loan remains outstanding as of such date.

A quarterly commitment fee of up to 0.50% is payable on the unused portion of the 2021 Revolving Credit Facility.

During the three months ended September 30, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 7.7%, respectively.

During the nine months ended September 30, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 7.3%, respectively.

The Company has an outstanding standby letter of credit for $0.7 million which reduces the amount available to be borrowed under the 2021 Revolving Credit Facility. As of September 30, 2024, $249.3 million was available to be borrowed under the 2021 Revolving Credit Facility.

The terms of the 2021 Credit Agreement include a financial covenant which requires that, at the end of each fiscal quarter, if the aggregate amount of borrowings under the 2021 Revolving Credit Facility exceeds 35% of the aggregate commitments, the leverage ratio of CCC Intelligent Solutions Inc. and certain of its subsidiaries cannot exceed 6.25 to 1.00. Borrowings under the 2021 Revolving Credit Facility did not exceed 35% of the aggregate commitments and the Company was not subject to the leverage test as of September 30, 2024.

Interest Rate Caps—In August 2022, the Company entered into two interest rate cap agreements, as amended, to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt. The amended interest rate cap agreements have an aggregate notional amount of $600.0 million and a one-month SOFR cap rate of 4.00% through their expiration in July 2025.

Cash Flows

The following table provides a summary of cash flow data for the nine months ended September 30, 2024 and 2023:


	Nine Months Ended September 30,
(dollar amounts in thousands)	2024			2023
Net cash provided by operating activities	$	170,241		$	163,138
Net cash used in investing activities		(45,073	)		(43,187	)
Net cash (used in) provided by financing activities		(34,438	)		5,383
Net effect of exchange rate change		1			(389	)
Change in cash and cash equivalents	$	90,731		$	124,945

Net cash provided by operating activities was $170.2 million for the nine months ended September 30, 2024. Net cash provided by operating activities consists of net income of $25.0 million, adjusted for $179.0 million of non-cash items, ($34.0) million for changes in working capital and $0.3 million for the effect of changes in other operating assets and liabilities. Significant non-cash adjustments include stock-based compensation expense of $127.2 million and depreciation and amortization of $92.2 million, partially offset by deferred income taxes of $32.9 million, and a change in fair value of warrant liabilities of $14.4 million. The change in working capital was primarily a result of an increase in accounts receivable of $27.2 million due to timing of cash receipts from customers and a decrease in accrued expenses of $14.9 million due to timing of cash disbursements and employee incentive plan payments, partially offset by an increase in accounts payable of $5.5 million due to timing of payments to suppliers.

Net cash used in investing activities was $45.1 million for the nine months ended September 30, 2024. Net cash used in investing activities was due to capitalized internally developed software projects and purchases of software, equipment, and property.

Net cash used in financing activities was $34.4 million for the nine months ended September 30, 2024. Net cash used in financing activities was due to $57.5 million of payments for employee tax liabilities related to the net share settlement of employee equity awards and $6.0 million of principal payments of long-term debt, partially offset by $24.0 million of proceeds from stock option exercises and $5.7 million of proceeds from the issuance of stock under the employee stock purchase plan.

Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures. Our estimates are based on our historical experience, trends and

various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.

There have been no material changes to our critical accounting estimates as compared to the critical accounting policies and estimates disclosed in our audited consolidated financial statements and notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of September 30, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended September 30, 2024 identified in management’s evaluation pursuant to in Rules 13a-15(d) and 15d-15(d) of the Exchange Act that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, the Company is from time to time, involved in various pending or threatened legal actions. The litigation process is inherently uncertain, and it is possible that the resolution of such matters might have a material adverse effect on the Company’s consolidated financial condition and/or results of operations. The Company’s management believes, based on current information, matters currently pending or threatened are not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

Item 1A. Risk Factors

For risk factors relating to our business, please refer to the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023. Any of these factors could result in a significant or material adverse effect on the results of our operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended September 30, 2024, Rodney Christo, Senior Vice President, Finance and Chief Accounting Officer of the Company, terminated a Rule 10b5-1 trading arrangement on August 13, 2024 intended to satisfy the affirmative defense of Rule 10b5-1(c) previously adopted on November 30, 2023 and, subsequently, entered into a new 10b5-1 trading arrangement on August 16, 2024 which is intended to satisfy the affirmative defense of Rule 10b5-1(c) providing for the sale of up to 331,640 shares of the Common Stock of the Company in the period commencing on November 14, 2024 and ending on the earlier of August 15, 2025 or the execution of all trades contemplated by the plan.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.


Exhibit Number		Description
10.1*		Amendment No. 2 to the Credit Agreement, dated as of September 23, 2024, by and between CCC Intelligent Solutions Inc. and Bank of America, N.A., as Administrative Agent.
31.1*		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104*		Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

__________

* Filed herewith

** Furnished herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated: October 28, 2024	CCC INTELLIGENT SOLUTIONS HOLDINGS INC.

	By:	/s/ Githesh Ramamurthy
	Name:	Githesh Ramamurthy
	Title:	Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
Dated: October 28, 2024

	By:	/s/ Brian Herb
	Name:	Brian Herb
	Title:	Executive Vice President, Chief Financial and Administrative Officer (Principal Financial Officer)

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CCC Intelligent Solutions (CCCS) 10-Q2024 Q3 Quarterly report

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