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CCC Intelligent Solutions Holdings Inc. (CCCS)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 delivered solid growth and profitability: revenue $232.6M (+10% YoY) and adjusted EBITDA $95.8M (+18% YoY), both ahead of company’s Q2 guidance ranges, with adjusted EBITDA margin at 41% .
  • FY 2024 guidance was adjusted: revenue trimmed to $941–$945M (midpoint down ~0.5%) while adjusted EBITDA raised to $391–$395M (midpoint up ~0.5%), reflecting slower in-year conversion of emerging solutions but stronger margin discipline; Q3 2024 guided to $236–$238M revenue and $97–$99M adjusted EBITDA .
  • Strategic product launches (CCC Intelligent Reinspection and CCC Build Sheets) and continued network expansion (30,000+ repair facilities; +600 YTD) underscore CCC’s durable business model and AI-led innovation pipeline .
  • Management flagged elongated pilot-to-revenue timelines for emerging solutions (Estimate-STP, Diagnostics, Subrogation), reducing 2024 contribution to ~1 point (vs prior expectation of ~2), with more material impact expected in 2025 — a key narrative driver to watch .
  • SPGI consensus estimates were unavailable at the time of query; comparisons to Wall Street estimates could not be provided (SPGI daily limit exceeded).

What Went Well and What Went Wrong

What Went Well

  • Strong execution: revenue $232.6M (+10% YoY) and adjusted EBITDA $95.8M (+18% YoY), with adjusted gross margin at 78% and adjusted EBITDA margin at 41% .
  • Product innovation momentum: launch of CCC Intelligent Reinspection to accelerate estimate review and reduce cycle times; Build Sheets integrated into CCC ONE to improve parts accuracy and shop productivity .
  • Durable model and network expansion: 99% software GDR, NDR ~107%, and repair network surpassed 30,000 facilities (+600 YTD), reinforcing revenue predictability and cross-sell potential .
  • Management quote: “CCC delivered strong second quarter results, highlighted by 10% year-over-year revenue growth and 41% adjusted EBITDA margin…confidence in our durable business model” — G. Ramamurthy .

What Went Wrong

  • Emerging solutions conversion slower than anticipated: 2024 contribution held at ~1 point (vs “~2 points”), pushing more material contribution into 2025; FY revenue guidance trimmed accordingly .
  • Q2 free cash flow declined YoY ($36.2M vs $55.0M) and cash from operations fell ($51.8M vs $69.6M), reflecting cost phasing and capex timing despite strong TTM FCF trends .
  • Operational disruption from third-party incident (CrowdStrike-related vendor): CCC immediately disconnected interfaces; limited impacts mainly to dealer-owned repair facilities and parts ordering for several weeks (minimal insurer impact) — highlights ecosystem dependency risk .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Revenue ($USD Millions)$211.7 $227.2 $232.6
GAAP Diluted EPS ($)$(0.16) $0.00 $0.03
Adjusted Diluted EPS ($)$0.07 $0.09 $0.09
GAAP Gross Margin (%)72% 74% 76%
Adjusted Gross Margin (%)77% 78% 78%
Adjusted EBITDA ($USD Millions)$80.9 $93.7 $95.8
Adjusted EBITDA Margin (%)38% 41% 41%
Cash from Operations ($USD Millions)$69.6 $55.2 $51.8
Free Cash Flow ($USD Millions)$55.0 $39.6 $36.2

KPIs and Network

KPIQ4 2023Q1 2024Q2 2024
Software GDR (%)99% 99% 99%
Software NDR (%)108% 107% 107%
Repair Facilities on Platform~30,000 29,500 >30,000; +600 YTD

Notes:

  • Q2 2024 non-GAAP adjusted metrics are reconciled in the 8-K; management emphasizes adjusted measures for comparability .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$944–$950 $941–$945 Lowered (midpoint ~$947 → ~$943)
Adjusted EBITDA ($USD Millions)FY 2024$389–$395 $391–$395 Raised (midpoint ~$392 → ~$393)
Revenue ($USD Millions)Q3 2024N/A$236–$238 New
Adjusted EBITDA ($USD Millions)Q3 2024N/A$97–$99 New

Management drivers:

  • Reset of emerging solutions contribution to ~1 point in 2024 (vs prior ~2 points) due to extended pilot-to-revenue timelines .
  • Margin trajectory supported by cost phasing and hiring cadence; full-year adjusted EBITDA margin expected to expand ~100 bps YoY to ~42% .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023 and Q1 2024)Current Period (Q2 2024)Trend
AI/Technology initiativesQ4: Expansion across Estimate-STP, First Look, Impact Dynamics, Subrogation ; Q1: IX Cloud event-driven architecture to accelerate adoption Launch of Intelligent Reinspection; Build Sheets; 300+ AI models underpin portfolio; continued customer pilots Accelerating
Emerging solutions adoptionQ4: ~1pt growth contribution ; Q1: expected ~2pts in 2024 2024 contribution ~1pt; greater 2025 impact expected Near-term slower, pushed to 2025
Network scale & repairersQ4: ~30k repair facilities ; Q1: 29,500 shops >30k repair facilities; +600 added YTD Uptrend
Margins & FCFQ4: adj EBITDA margin 44% ; Q1: 41% Q2: 41%; FY margin target ~42%; TTM FCF margin ~22% Margin expansion YoY (seasonal pattern)
Macro/ops resilienceQ1: labor shortages, complexity ;Minimal insurer impact from third-party outage; dealer/parts ordering disruption managed Stable, operational resilience
Capital structure/liquidityQ4: free float ~50% ; Q1: ~60% >70% free float; warrants converted (3.8M shares issued) Improved liquidity

Management Commentary

  • Durable business model and trust: “Our solid performance…reinforces our confidence in our durable business model…These principles…are the key enablers to our 99% GDR and industry-leading Net Promoter Score of 83.” — G. Ramamurthy .
  • Innovation engine: “Over the past decade, we have invested over $1 billion in R&D…created over 300 unique AI models…customers have processed tens of millions of unique claims using a CCC AI-enabled solution.” — G. Ramamurthy .
  • Emerging solutions cadence: “It is taking longer to convert pilots to revenue than originally forecast…contribution from emerging solutions will remain at about 1% for 2024…more material in 2025.” — B. Herb .
  • Subrogation ROI: “Inbound subrogation…80% decrease in cycle time…accuracy increase between 20% and 50%…tens of millions of dollars of improvement.” — G. Ramamurthy .
  • Build Sheets value: VIN-specific options enable fewer part returns and reduced cycle time; early adoption strong, self-service add-on in CCC ONE .

Q&A Highlights

  • Emerging solutions timing and FY outlook: 2024 emerging contribution ~1pt (vs 2pt prior), with expectations for more material uplift in 2025; long-term target remains intact .
  • Margin profile: Early-stage costs for new products dilute margins initially, but at scale, margins should align with established solutions; gross profit target 80% over time .
  • IX Cloud integration: Enables multiple solutions to work better together (Estimate-STP, First Look, Impact Dynamics), accelerating deployment and expanding use cases .
  • CrowdStrike-related vendor outage: CCC not a user; immediate interface disconnection limited impact mostly to dealer-owned repair facilities and parts ordering; minimal insurer impact .
  • Stock-based compensation: Elevated in 2024 due to TSR modification; expected to normalize to ~12–14% of revenue in 2025 .

Estimates Context

  • Wall Street consensus estimates (SPGI/Capital IQ) were unavailable at the time of query due to provider daily limit constraints; therefore, comparisons to consensus for revenue and EPS could not be provided.
  • Company-level comparison: Q2 revenue and adjusted EBITDA exceeded CCC’s prior Q2 guidance ranges (Q2 guide: $228.5–$230.5M revenue; $89–$91M adjusted EBITDA) versus actual $232.6M and $95.8M, respectively .

Key Takeaways for Investors

  • Execution beat vs company guidance amid margin discipline: Q2 revenue $232.6M and adjusted EBITDA $95.8M topped ranges; adjusted gross margin 78% and adjusted EBITDA margin 41% demonstrate operating leverage .
  • FY guidance mix: revenue midpoint trimmed (~$947M → $943M) while EBITDA midpoint raised ($392M → ~$393M); narrative pivot reflects elongated pilot conversion for emerging solutions but stronger profitability focus .
  • Watch 2025 emerging solutions uplift: management expects more material contributions next year as customers complete change management and scale deployments (Estimate-STP, Diagnostics, Subrogation) — potential estimate revisions upward if adoption accelerates .
  • Product catalysts: Intelligent Reinspection and Build Sheets should enhance insurer/repairer efficiency and cycle times, supporting cross-sell/upsell and network lock-in .
  • Network durability and pricing power: 99% GDR, NDR ~107%, 30k+ repair facilities (+600 YTD) sustain predictable growth via cross-sell and volume components .
  • Capital structure/liquidity: free float >70%, warrant conversion completed; improved trading liquidity may broaden shareholder base .
  • Near-term trading lens: neutral-to-positive skew as execution offsets revenue guide trim; monitor Q3 delivery vs guide ($236–$238M revenue, $97–$99M EBITDA) and any signs of faster emerging solution monetization on the call cadence .