CCC Intelligent Solutions Holdings Inc.

Thank you for standing by and welcome to CCC's third quarter 2023 financial results conference call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there will be a question and answer session. To ask a question at that time, please press star 11 on your telephone. Please be advised that today's call is being recorded. I will now turn the conference to your host, Mr. Bill Warmington, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, and thank you all for joining us today to review CCC's third quarter 2023 financial results, which we announced in the press release issued following the close of the market today. Joining me on the call are Gitesh Ramamurthy, CCC's chairman and CEO, and Brian Herb, CCC's CFO. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that may cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the earnings releases available on our investor relations website and under the heading Risk Factors in your 2022 Annual Report on Form 10-K filed with the SEC. Further, these comments and the Q&A that follows are copyrighted today by CCC Intelligence Solutions Holdings, Incorporated. Any recording, retransmission, or reproduction or other use of the same for profit or otherwise without prior consent of CCC is prohibited and a violation of United States copyright and other laws. Additionally, while we've approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. Please note that the discussion on today's call includes certain non-GAAP financial measures as defined by the SEC. The company believes that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends related to the company's financial condition and the results of operations. Reconciliation of GAAP to non-GAAP measures is available in our earnings release that is available on our investor relations website. Thank you, and now I'll turn the call over to Kitesh.

Thank you, Bill, and thanks to all of you for joining us today. I am pleased to report that CCC delivered another quarter of strong top and bottom line results, reflecting both the predictability and mission critical nature of our solutions. For the third quarter of 2023, CCC's total revenue was $221 million, up 11% year over year and ahead of our guidance range. Adjusted EBITDA was $93 million, up 19% year-over-year and well ahead of our guidance range. Our adjusted EBITDA margin was 42%, up 270 basis points year-over-year. Based on our strong performance in the third quarter and year-to-date, coupled with our outlook for Q4, we are raising our revenue and adjusted EBITDA guidance for the full year, which Brian will walk through. On today's call, I'd like to highlight three themes of significant importance. The first is CCC's durable business model, the second is innovation, and the third is our strategic outlook for the business. First, our durable business model. A key part of our business model's durability is the diversity of our customer base and product offerings. Over four decades, we have built one of the industry's most comprehensive platforms, comprised of a range of different solutions that brings together over 35,000 participants across the P&C insurance economy, including insurers, repair facilities, parts suppliers, automotive OEMs, and more. The result is a growth algorithm balanced across a wide variety of solutions, clients and customer groups. We're focused on continuing to grow our customer base while investing in innovation that brings new high ROI solutions to the market. These solutions not only drive improvements in our customers operating efficiency and consumer experience, but also serve to expand the CCC network. We believe our decades-long track record of helping clients with the mission-critical operations is a cornerstone of our durable business model and why customers typically adopt more of our products over time. That support from our customers is reflected in our financial results. In the 11 quarters since becoming public, We have grown our revenue run rate by roughly $250 million to more than $880 million, an increase of about 40%, while growing our adjusted EBITDA run rate by roughly $150 million to more than $370 million, an increase of nearly 70%. We believe the digitization of the auto insurance economy still has a long way to go and can support this attractive combination of top and bottom line growth well into the future. A key driver of our durable growth model is the breadth of our multi-sided network. Since our founding, our network has steadily grown by adding individual participants as well as new categories of participants within the P&C insurance economy. As the total network has grown, so has the value of the network to each participant. CCC's electronic parts ordering solution is a good example of how multiple participants in the ecosystem benefit from being in the CCC network. Our electronic parts platform brings the relevant parties together to increase buyer's visibility into parts availability and pricing and to help reduce errors and cycle time as a result ccc's parts platform can help improve operational efficiency for insurers automotive oems parts suppliers and repair facilities through process simplification integration and automation A case in point is auto manufacturer Toyota Motor North America, who expanded their participation in CCC's parts network to support its Toyota and Lexus dealers earlier this year. That, in turn, has contributed to strong sign-ups of new dealers for electronic parts soldering, with over half of those new dealers in the last couple of months being Toyota or Lexus dealers. We're also seeing an increase in electronic parts ordering in general as a wider range of dealers choose to transact on our platform. At this point, about 17% of the industry's parts volume by gross market value is being ordered electronically through the CCC network. The second point I'd like to discuss with you today is the strong velocity of innovation in each of our customer groups. Our goal at CCC is to enable the digitization of the entire automobile claim supply chain from first notice of loss through subrogation. AI enables insurers and repair facilities to automate more steps in the process based on their rules and thereby more efficiently support their customers. In order to drive operating efficiency and a better consumer experience, We believe all members of the insurance economy, insurers, repair facilities, parts providers, and others need seamless integration, leveraging AI, connected networks, and digital engagement. You may recall we added substantial development capacity in 2022 to deliver our future product roadmap. I'm also pleased to report that we have completed substantial improvements to our multi-tenant public cloud IT infrastructure, which further improves seven key areas of our infrastructure. Speed to market, system availability, performance, agility, scalability, security, and cost structure. This combination of development capacity and infrastructure upgrades gives us the confidence in our ability to continue to scale innovation and efficiently deliver new solutions and updates. Over the last several years, we have also invested heavily in building AI into the workflow solutions we offer our customers. With insurers, for example, we are seeing growing traction of estimate STP and strong customer interest in our AI-driven subrogation solutions. Last quarter, we talked about our new AI-based computer vision solution for casualty claims known as Impact Dynamics, which links our auto physical damage or APD and casualty capabilities to predict potential physical injuries to the occupants of a vehicle involved in an accident based on photos of the damaged vehicles. Customers have reacted very positively to the solution and we already have a top five auto insurer contracted for it. As a leading operating system for the collision repair industry, we believe that CCC is well positioned to continue to roll out new differentiated solutions for repair facilities that help to solve their key pain points, as we've been doing for more than a decade. In 2010, we had about 20,000 repair facilities on CCC-1 and only about one in 10 repair facilities use more than one product. Today we have over 29,000 repair facilities and about two thirds of them use more than one product. That's a nearly tenfold increase in the number of repair facilities using multiple CCC products. yet we still have many new growth opportunities ahead of us. These include expanding our network to new partner integrations, adding new AI solutions to improve repair facilities efficiency and lead generation effectiveness, and introducing new capabilities to help our repair facility customers with their front and back office productivity. In September, We announced a collaboration with Google to make it easier for consumers to schedule online appointments with collision repairers that use Engage, our scheduling and self-service lobby check-in package for repair facilities. This collaboration adds a user-friendly book online button to Google business profiles, search, and maps. helping participating repair facilities stand out in search results and making it easier for consumers to schedule repair appointments. We believe this type of deep integration across products helps improve repairers' lead generation, consumer experience, and operating efficiency. Last month, we announced two new AI-driven solutions that help address the tight labor challenges facing repairers in writing estimates for damaged vehicles. The first, Repair Cost Predictor, is a new AI-powered feature within Engage that allows consumers who are shopping for a repair to upload photos of the damaged vehicle and receive a predicted range for the cost of repair in seconds. The consumer can then book an appointment for an estimate or directly schedule a repair, giving repair facilities the ability to efficiently capture and convert digital leads even after hours. The photos and predictions are seamlessly integrated into CCC-1, further enhancing repair facilities' ability to service their customers. The second new AI-based solution for repairers, Mobile Jumpstart, is a new feature within our CCC1 estimating IQ solution that helps estimators significantly reduce the time it takes to prepare estimates by leveraging their mobile phones. Mobile adoption in the collision repair industry is high, with about 85% of users operating the CCC mobile app daily and collectively taking over 40 million digital photos per month on their phones. In early usage, mobile jumpstart is reducing the average time to complete an initial estimate from about half an hour to a few minutes or less. This is a game changer. And with about 45% of repair estimates, written by estimators at repair facilities, we are optimistic that the combination of repair cost predictor and mobile jumpstart can have a meaningful impact on cycle time in the industry. In addition to improving their repair operations, our repair facility customers are also asking us to deliver new solutions that enhance their front and back office productivity. Last month, We introduced one such solution targeted at addressing a common customer pain point, digital presence. Consumers generally expect businesses to have a modern website they can interact with. Yet often in the collision repair industry, those websites are outdated and many repair facilities do not have one at all. Our new solution, called Amplify, enables repair facilities to quickly and easily set up a modern professional looking website with deep integration to CCC One. Amplify automatically pulls the relevant information from the repair facility CCC One profile into a pre-built customizable template and keeps that information in sync. So for example, When the repair facility adjusts their hours of operation in CCC One, those hours automatically update on the website. The repair facility's new digital presence also integrates seamlessly with their other CCC capabilities. For example, by incorporating Engage's online scheduling capability directly into their website. And as new CCC solutions roll out, that repair facility's digital presence can be continually upgraded as well. Digital presence is just one of many front and back office solutions our customers are looking for help in. And with our platform, network, and AI capabilities, we see many additional opportunities that we can deliver in the future. For my third and final point, I would like to discuss our strategic outlook for the business. We recently completed our five-year strategic planning session and as a very long-term shareholder in CCC, perhaps the longest shareholder in CCC, I wanted to say that this is the most excited I've ever felt about our long-term opportunities. As you all know, our industry has serious secular challenges. In all the years of talking to our customers, I have never seen more determination to deal with the biggest challenges facing the industry. Labor shortages, rising vehicle complexity, persistent inflation, increasing consumer expectations, challenges that are reflected in over 2 billion days of cumulative annual cycle time for automotive claims. I believe these forces are driving a once-in-a-generation digital upgrade cycle across the auto insurance economy, and that CCC is uniquely positioned to help our clients navigate this transition. We put a lot of time and effort into understanding our customers' businesses and their pain points. We hold advisory council meetings for our client groups multiple times per year and conduct deep business reviews with many individual clients quarterly. As a result of this deep understanding of the auto insurance economy, we are able to build novel, mission-critical solutions with high ROI and short time to value that leverage our multi-sided network. These solutions drive billions of dollars of impact to customers annually and are central to improving their consumer experience and support our 98% plus retention rate and 82 net promoter score. We feel good about the business and I'm very encouraged by our pipeline of solutions, both recently introduced and in development. Our new solutions increasingly combine our multi-sided network and artificial intelligence to help our clients improve their operating efficiency and consumer experience. In addition, I believe we will continue to have opportunities to develop new solutions for our clients to help them deal with the growing technological and other complexities facing their businesses. I will now turn the call over to Brian who will walk you through our results in more detail.