• Total Revenue: $238.5 million, up 8% year-over-year.
• Adjusted EBITDA: $102 million, up 9% year-over-year.
• Adjusted EBITDA Margin: 43%, approximately 60 basis points increase year-over-year.
• Software Gross Dollar Retention (GDR): 99%.
• Software Net Dollar Retention (NDR): 106%.
• Free Cash Flow: $49 million for Q3, $200 million on a trailing 12-month basis.
• Free Cash Flow Margin: 22% on a trailing 12-month basis.
• Cash and Cash Equivalents: $286 million.
• Debt: $778 million.
• Net Leverage: 1.3 times adjusted EBITDA.
• Q4 2024 Revenue Guidance: $242.5 million to $246.5 million.
• Full Year 2024 Revenue Guidance: $941 million to $945 million.
• Full Year 2024 Adjusted EBITDA Guidance: $394 million to $396 million.

• Warning! GuruFocus has detected 2 Warning Sign with RMBS.

Release Date: October 28, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CCC Intelligent Solutions Holdings Inc (NASDAQ:CCCS) reported a strong financial performance with total revenue of $238 million, up 8% year-over-year, slightly above guidance.
• Adjusted EBITDA for the quarter was $102 million, up 9% year-over-year, with an adjusted EBITDA margin of 43%.
• The company is experiencing durable revenue growth and margin expansion driven by new business wins, renewals, and contract expansions.
• CCC's investments in AI and event-driven architecture are positioning the company well for future growth, with AI now an eight-figure business.
• The company has a strong pipeline for its emerging solutions, which are the fastest-growing part of its portfolio, with positive customer feedback and demonstrated ROI.

Negative Points

• The velocity of revenue conversion from new solutions is slower than anticipated due to clients' internal change management processes.
• There is some softness affecting claim volume across 2024, with claim volumes estimated to be down approximately 6% year-over-year.
• The adoption of new products is taking longer than expected, impacting the timing of revenue growth.
• CCC is facing tougher year-over-year comps in the second half of the year, affecting growth rates.
• The company is experiencing some challenges in the full rollout of outbound subrogation due to its complexity and integration requirements.

Q & A Highlights

Q: What needs to happen to increase the adoption of CCC's newer products? A: Githesh Ramamurthy, CEO: Adoption typically involves significant energy from customers to pilot, test, and calculate ROI of new solutions. Progress is being made, as seen with the Estimate-STP solution, which increased from 3% to 4% adoption. Consistent engagement and focus with customers are key to overcoming adoption bottlenecks.

Q: How does the softness in claim volume affect CCC's business, and is there an opportunity to mitigate this through contract renewals? A: Githesh Ramamurthy, CEO: While claim volumes have been down, the cost per claim is rising due to vehicle complexity. This provides an opportunity to emphasize the broader value of CCC's solutions during contract renewals, despite the variability in claim volumes.

Q: Are there any changes planned in how CCC sells or onboards customers to increase conversion rates for emerging solutions? A: Githesh Ramamurthy, CEO: CCC has aligned its client-facing organizations to focus more on pilots and solutions with customers. The volume of pilots is significantly higher, indicating a strong pipeline. The conversion rate is customer-specific rather than a macro issue.

Q: How does the IX Cloud impact ROI for customers, and how does it relate to change management challenges? A: Githesh Ramamurthy, CEO: IX Cloud allows customers to pilot multiple solutions simultaneously, enhancing efficiency through interoperability. While change management varies by client, the aggregate ROI from these solutions has been positive, supporting long-term value delivery.

Q: Can you elaborate on the impact of hurricanes on CCC's business and provide historical context? A: Brian Herb, CFO: Hurricanes have not materially impacted CCC's volumes. The revenue impact depends on client mix, as some clients have flat fees while others have transactional components. Historically, hurricanes affect local regions but do not significantly shift national volumes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.