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CCC Intelligent Solutions (CCCS) - 2023 Q2 - Quarterly Report
CCCSCCC Intelligent Solutions (CCCS)2023-07-31 16:00
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Revenue and Deferred Revenue - Revenue recognized from deferred revenue for Q2 2023 was 39.1million,comparedto39.1 million, compared to 32.2 million in Q2 2022[9] - Deferred revenue balance at the end of Q2 2023 was 41.203million,upfrom41.203 million, up from 34.742 million in Q2 2022[9] - Revenue recognized from deferred revenue for H1 2023 was 34.6million,comparedto34.6 million, compared to 30.2 million in H1 2022[9] - Total deferred contract costs at the end of Q2 2023 were 36.351million,slightlyupfrom36.351 million, slightly up from 35.890 million in Q2 2022[9] Acquisition and Goodwill - Total purchase price for the acquisition was 32.5million,withgoodwillaccountingfor32.5 million, with goodwill accounting for 28.245 million[6] - The company recorded a measurement period adjustment of 0.9millionfordeferredtaxliabilities,increasinggoodwill[6]−Thefairvalueofacquiredtechnologyintangibleassetwasdeterminedtobe0.9 million for deferred tax liabilities, increasing goodwill[6] - The fair value of acquired technology intangible asset was determined to be 4.8 million[6] - Transaction costs associated with the acquisition amounted to 1.2million[6]FinancialPerformance−TotalrevenuesforQ22023were1.2 million[6] Financial Performance - Total revenues for Q2 2023 were 211.71 million, compared to 192.79millioninQ22022[36]−NetlossforQ22023was192.79 million in Q2 2022[36] - Net loss for Q2 2023 was 97.66 million, compared to a net income of 15.56millioninQ22022[36]−GrossprofitforQ22023was15.56 million in Q2 2022[36] - Gross profit for Q2 2023 was 152.59 million, up from 139.94millioninQ22022[36]−OperatinglossforQ22023was139.94 million in Q2 2022[36] - Operating loss for Q2 2023 was 73.19 million, compared to an operating income of 12.52millioninQ22022[36]−ComprehensivelossforQ22023was12.52 million in Q2 2022[36] - Comprehensive loss for Q2 2023 was 97.94 million, compared to a comprehensive income of 15.26millioninQ22022[36]−Netlossattributabletocommonstockholderswas15.26 million in Q2 2022[36] - Net loss attributable to common stockholders was 97.7 million for the three months ended June 30, 2023, and 95.5millionforthesixmonthsendedJune30,2023[91]−NetlossforthethreemonthsendedJune30,2023was95.5 million for the six months ended June 30, 2023[91] - Net loss for the three months ended June 30, 2023 was 97.3 million, compared to a net income of 15.6millioninthesameperiodin2022[224]−AdjustedEBITDAforthesixmonthsendedJune30,2023was15.6 million in the same period in 2022[224] - Adjusted EBITDA for the six months ended June 30, 2023 was 160.4 million, with an Adjusted EBITDA Margin of 39%[224] - Adjusted EBITDA for the six months ended June 30, 2023 was 142.1million,comparedto142.1 million, compared to 133.5 million in the same period in 2022[235] - Adjusted net income for the six months ended June 30, 2023 was 94.3million,comparedto94.3 million, compared to 86.3 million in the same period in 2022[238] - Adjusted earnings per share (diluted) for the six months ended June 30, 2023 was 0.15,comparedto0.15, compared to 0.13 in the same period in 2022[238] Expenses and Costs - Research and development expenses for Q2 2023 were 43.36million,upfrom43.36 million, up from 38.76 million in Q2 2022[36] - Total cost of revenues for Q2 2023 was 59.12million,upfrom59.12 million, up from 52.85 million in Q2 2022[36] - Interest expense for Q2 2023 was 14.01million,comparedto14.01 million, compared to 7.94 million in Q2 2022[36] - Depreciation and amortization expense for software, equipment, and property was 8.8millionforQ22023[53]−TotalleasecostsforQ22023were8.8 million for Q2 2023[53] - Total lease costs for Q2 2023 were 2,503, with operating lease costs at 1,486andvariableleasecostsat1,486 and variable lease costs at 1,017[54] - Selling and marketing expense increased by 4.8millionto4.8 million to 35.9 million, or 15.6%, for Q2 2023 compared to Q2 2022[133] - Research and development expense increased by 4.6millionto4.6 million to 43.4 million, or 11.9%, for the three months ended June 30, 2023[164] - Selling and marketing expense increased by 11.6millionto11.6 million to 69.5 million for the six months ended June 30, 2023, primarily due to higher personnel-related costs[215] - General and administrative expense increased by 4.3millionto4.3 million to 88.0 million for the six months ended June 30, 2023, primarily due to higher personnel-related costs[228] - Adjusted operating expenses were 176.5millionforthesixmonthsendedJune30,2023[221]IntangibleAssetsandImpairment−NetcarryingamountofintangibleassetsasofJune30,2023is176.5 million for the six months ended June 30, 2023[221] Intangible Assets and Impairment - Net carrying amount of intangible assets as of June 30, 2023 is 1,064,064, with customer relationships contributing 848,661andacquiredtechnologiesat848,661 and acquired technologies at 24,933[74] - The company recorded an impairment charge of 5.3millionforitsChinareportingunit′scustomerrelationshipsandacquiredtechnologiesintangibleassetsduringthethreemonthsendedJune30,2023[98]−Amortizationexpenseforintangibleassetswas5.3 million for its China reporting unit's customer relationships and acquired technologies intangible assets during the three months ended June 30, 2023[98] - Amortization expense for intangible assets was 24.7 million for the three months ended June 30, 2023, and 49.4millionforthesixmonthsendedJune30,2023[99]−Thecompanyrecordedagoodwillimpairmentchargeof49.4 million for the six months ended June 30, 2023[99] - The company recorded a goodwill impairment charge of 77.4 million for its China reporting unit due to adverse market conditions and increased interest rates[96] - The company recorded a goodwill impairment charge of 77.4millionfortheChinareportingunitduringthethreemonthsendedJune30,2023[171]−ImpairmentofgoodwillforthesixmonthsendedJune30,2023was77.4 million for the China reporting unit during the three months ended June 30, 2023[171] - Impairment of goodwill for the six months ended June 30, 2023 was 77.4 million[235] Loans and Interest Rates - Term B Loan outstanding amount as of June 30, 2023 is 788.0million,with788.0 million, with 8.0 million classified as current[78] - Weighted-average interest rate on Term B Loan for Q2 2023 was 7.4%, with interest payments of 14.6million[78]−UnamortizeddebtdiscountforTermBLoanasofJune30,2023is14.6 million[78] - Unamortized debt discount for Term B Loan as of June 30, 2023 is 1.6 million[77] - Unamortized financing costs for Term B Loan as of June 30, 2023 are 7.7million[77]−Deferredfinancingfeesassetbalancefor2021RevolvingCreditFacilityasofJune30,2023is7.7 million[77] - Deferred financing fees asset balance for 2021 Revolving Credit Facility as of June 30, 2023 is 2.0 million[77] - The company entered into two interest rate cap agreements with an aggregate notional value of 600.0million,acaprateof4.0600.0 million, a cap rate of 4.0%, and an expiration date of July 31, 2025[80] - The aggregate fair value of the interest rate cap agreements was 13.0 million as of June 30, 2023, compared to 12.0millionasofDecember31,2022[80]−Thecompany′sTermBLoanbalancewas12.0 million as of December 31, 2022[80] - The company's Term B Loan balance was 788.0 million as of June 30, 2023, compared to 792.0millionasofDecember31,2022[79]−Theweighted−averageinterestrateontheoutstandingborrowingsundertheTermBLoanincreasedfrom3.2792.0 million as of December 31, 2022[79] - The weighted-average interest rate on the outstanding borrowings under the Term B Loan increased from 3.2% in 2022 to 7.1% in 2023[103] - The weighted-average interest rate on the Term B Loan for the six months ended June 30, 2023 was 7.1%, compared to 3.2% in the same period in 2022[227] Warrant Liabilities - The company had 17,800,000 Private Warrants outstanding as of June 30, 2023, with an exercise price of 11.50 per share[86] - The company recognized a loss of 20.4millionasachangeinfairvalueofwarrantliabilitiesforthethreemonthsendedJune30,2023[86]−Thecompany′swarrantliabilitywas20.4 million as a change in fair value of warrant liabilities for the three months ended June 30, 2023[86] - The company's warrant liability was 55.6 million as of June 30, 2023, compared to 36.4millionasofDecember31,2022[86]−Thecompanyrecognizedalossof36.4 million as of December 31, 2022[86] - The company recognized a loss of 20.4 million from a change in fair value of warrant liabilities for the three months ended June 30, 2023[167] - Change in fair value of warrant liabilities resulted in an expense of 19.2millionforthesixmonthsendedJune30,2023[207]CashFlowandWorkingCapital−Netcashprovidedbyoperatingactivitieswas19.2 million for the six months ended June 30, 2023[207] Cash Flow and Working Capital - Net cash provided by operating activities was 102.6 million for the six months ended June 30, 2023, compared to 87.7millioninthesameperiodin2022[168]−FreecashflowforthesixmonthsendedJune30,2023was87.7 million in the same period in 2022[168] - Free cash flow for the six months ended June 30, 2023 was 73.5 million, compared to 62.2millioninthesameperiodin2022[238]−Thecompanygenerated62.2 million in the same period in 2022[238] - The company generated 102.6 million in cash flows from operating activities during the six months ended June 30, 2023[238] - As of June 30, 2023, the company had cash and cash equivalents of 403.6millionandaworkingcapitalsurplusof403.6 million and a working capital surplus of 416.3 million[238] Stock and Compensation - The company issued 1,818 shares of Series A Preferred Stock at 7,854pershare,representinga10.07,854 per share, representing a 10.0% ownership interest in CCC Cayman as of June 30, 2023[82] - Total stock-based compensation expense was 35.5 million for the three months ended June 30, 2023, compared to 28.4millioninthesameperiodin2022[85]−Thecompanygranted539,400stockoptionsundertheCaymanIncentivePlansduringthesixmonthsendedJune30,2023[109]−Stock−basedcompensationexpenseandrelatedemployerpayrolltaxforthesixmonthsendedJune30,2023was28.4 million in the same period in 2022[85] - The company granted 539,400 stock options under the Cayman Incentive Plans during the six months ended June 30, 2023[109] - Stock-based compensation expense and related employer payroll tax for the six months ended June 30, 2023 was 67.3 million, compared to 53.3millioninthesameperiodin2022[235]Taxes−IncometaxpaymentsforthesixmonthsendedJune30,2023were53.3 million in the same period in 2022[235] Taxes - Income tax payments for the six months ended June 30, 2023 were 20.0 million, with refunds totaling 39thousand[65]−Thecompany′seffectivetaxrateforthethreemonthsendedJune30,2023was2.339 thousand[65] - The company's effective tax rate for the three months ended June 30, 2023 was 2.3%, compared to 39.4% for the same period in 2022[64] - Income tax benefit for the six months ended June 30, 2023 was 3.1 million, compared to an income tax provision of 9.3millioninthesameperiodin2022[218]CustomerandMarketData−Onecustomeraccountedfor119.3 million in the same period in 2022[218] Customer and Market Data - One customer accounted for 11% of accounts receivable as of June 30, 2023[67] - The company has customer agreements with more than 300 insurers and over 35,000 total customers, including 29,000 automotive collision repair facilities[122] - The company processed more than 1 trillion of historical data across its network, leveraging insurance claims, vehicle repair, and automotive parts information[121] - The company has processed more than 14 million unique claims using CCC deep learning AI as of December 31, 2022, a 50% increase over December 31, 2021[121] Other Financial Metrics - Accounts receivable as of June 30, 2023, were 96.14million,downfrom96.14 million, down from 98.35 million as of December 31, 2022[67] - Total other liabilities as of June 30, 2023 are 1,550,includingdeferredrevenue—non−currentat1,550, including deferred revenue—non-current at 1,139[77] - Total accrued expenses decreased from 71.445millioninDecember2022to71.445 million in December 2022 to 54.711 million in June 2023[100] - Credit card processing revenues increased from 198millioninJune2022to198 million in June 2022 to 274 million in June 2023[113] - Employee health insurance benefits decreased to 209millionasofJune30,2023,from209 million as of June 30, 2023, from 501 million as of December 31, 2022[142] - Software NDR was 107% for Q2 2023, compared to 111% for Q2 2022[152] - Software GDR remained stable at 99% for both Q2 2023 and Q2 2022[154] - Revenues increased by 18.9millionto18.9 million to 211.7 million, or 9.8%, for Q2 2023 compared to Q2 2022[155] - Cost of revenues increased by 6.3millionto6.3 million to 59.1 million, or 11.9%, for Q2 2023 compared to Q2 2022[163] - Total revenues increased by 18.9millionto18.9 million to 211.7 million, or 9.8%, for the three months ended June 30, 2023, compared to the same period in 2022[156] - Software subscription revenues accounted for 202.9million,or96202.9 million, or 96%, of total revenue for the three months ended June 30, 2023[156] - Gross profit increased by 12.6 million to 152.6million,or9.0152.6 million, or 9.0%, for the three months ended June 30, 2023, with a gross profit margin of 72.1%[158] - Revenue increased by 37.0 million to 416.6million,or9.8416.6 million, or 9.8%, for the six months ended June 30, 2023[199] - Gross profit increased by 23.0 million to 300.4million,or8.3300.4 million, or 8.3%, for the six months ended June 30, 2023[203] - Cost of revenues increased by 14.0 million to 116.3million,or13.7116.3 million, or 13.7%, for the six months ended June 30, 2023[202] - Interest expense increased by 12.6 million to 27.8million,or82.227.8 million, or 82.2%, for the six months ended June 30, 2023[206] - Amortization of acquired technologies was 13.3 million for the six months ended June 30, 2023[202] - Interest income was 7.3millionforthesixmonthsendedJune30,2023[217]−AdjustedGrossProfitforthesixmonthsendedJune30,2023was7.3 million for the six months ended June 30, 2023[217] - Adjusted Gross Profit for the six months ended June 30, 2023 was 318.6 million, with an Adjusted Gross Profit Margin of 76%[233] - Interest expense for the six months ended June 30, 2023 was 27.8million,comparedto27.8 million, compared to 15.3 million in the same period in 2022[224] - The Company recognized 1.0millionincomefromachangeinfairvalueofderivativeinstrumentsforthesixmonthsendedJune30,2023[230]−AdjustedoperatingincomeforthethreemonthsendedJune30,2023was1.0 million income from a change in fair value of derivative instruments for the six months ended June 30, 2023[230] - Adjusted operating income for the three months ended June 30, 2023 was 71.8 million, compared to 66.7millioninthesameperiodin2022[235]−Thecompanyhad66.7 million in the same period in 2022[235] - The company had 788.0 million aggregate principal outstanding on its term loan as of June 30, 2023[238]