CCC Intelligent Solutions Holdings Inc.

Good day, and thank you for standing by. Welcome to the CCC Intelligent Solutions Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. We ask that you limit yourself to one question and one follow-up question. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, 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 second quarter 2025 financial results, which we announced in the press release issued following the close of the market today. Joining me on the call are Ditesh 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 of risk factors in our 2024 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 the United States copyright and other laws. Additionally, while we will provide a transcript of portions of this call and 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 the transcripts. Please note that the discussion of today's call include certain non-GAAP financial measures as defined by the SEC. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to the company's financial condition and the results of operations. The 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 Gitesh.

Thank you, Bill, and thanks to all of you for joining us today. I'm pleased to report that CCC delivered another quarter of strong top and bottom line results, reflecting the predictability and profitability of our business. The second quarter of 2025, CCC total revenue was $260 million, growing 12% year over year, exceeding our guidance range. Adjusted EBITDA was $108 million, also ahead of our guidance range and adjusted EBITDA margin was 42%. On today's call, I'd like to cover three themes. The first is the growing success we are having with larger customers in expanding their adoption of our solutions. The second is our continued focus on balancing operating efficiency and investment in innovation. And the third is the power of combining our interconnected network with a unique data and AI enabled solutions. In terms of my first topic, as you know, customers, particularly our largest and most technologically sophisticated ones, undergo lengthy testing and piloting phases when considering new products. This process is critical in validating customer specific ROI identifying internal process improvements that can be made as a result of these new solutions and driving alignment across a company's operations. In the second quarter, we began to see early evidence of more of our largest customers progressing past this pilot phase into broader rollouts of our solutions across their businesses. Let's start with emerging solutions. In Q2, several top 10 insurers contracted for multiple AI-enabled autophysical damage or APD solutions that extend our photo AI capabilities beyond estimating to include earlier stages of claim handling as well as later stages such as audit and review. These solutions have, for example, cut the time to identify a total loss in half resulting in millions of dollars of annual impact with the potential to improve that time and impact even further. This is a win-win-win. Insurers avoid unnecessary fees, repair facilities free of bays for their repairable vehicles, and consumers get faster and more satisfying claims resolution. Another example, comes from a client, a top 10 insurer, who contracted for this same solution in Q2 after seeing a significant increase in operating efficiency from consumers using the solution's self-service features to document damage, select a repair facility, and schedule an appointment. A third example is the use of AI to streamline the back and forth between insurers and repair facilities over changes to repair estimates, also known as supplements. Over 60% of estimates now have a supplement, or in many cases, multiple supplements. This is a byproduct of the growing complexity in our industry, so this is a major pain point for both insurers and repairers. Our AI-based solution can help expedite this process, and in some cases, auto-approve these changes for an insurer's guidelines, significantly reducing cycle time and manual effort. In Q2, a top five insurer converted from a limited pilot to a full rollout for this solution as well. Our AI-based subrogation solution is yet another example of growing adoption across the insurance economy. As you have heard been discussed before, Subrogation is often an expensive paper-based manual process that costs insurers more than $2 billion annually to administer. We are seeing growing interest in our AI-based subrogation solution, and we currently have 25 customers on our subrogation platform, including multiple top 10 insurers on phased production agreements. This group also includes a top 20 insurer who, after a lengthy trial period, entered into a long-term agreement with us in Q2 for two key reasons. The first was an attractive 621 ROI driven by a combination of efficiency and accuracy. Processing demand packages now literally takes minutes or hours versus days and weeks previously. The second reason was the increase in productivity of employees using our tools. Our solutions are intuitive to learn, easy to use, and help identify important information quickly, which is especially valuable to insurers as the retirements of an experienced workforce means more new hires. With CCT's AI-based subrogation tools, this insurer saw a significant acceleration in speed to competency in less experienced workers, future-proofing them as their workforce evolves. Decision in Q2 by multiple large insurers to contract with us for our AI-based APD solutions underscores the growing market momentum for these tools and strengthens our belief in the long-term growth trajectory of our expanding portfolio of AI-based solutions. We're also seeing strength in our established solutions like Casualty. While part of the CCC portfolio for more than a decade, we have over the last several years essentially rebuilt our Casualty offering by completely retooling the tech stack, bringing in new leadership, and investing heavily in new product development. With Casualty-related claims costs Rising faster than general healthcare costs, customers are increasingly interested in our platform's ability to deliver large, tangible impact in this area. Casualty is a significant growth opportunity for CCC with a very large white space available. While similar in total market opportunity to autofiscal damage, or APD, Casualty today only represents about 10% of our revenue and our customer count is one-fifth that of APD. The fact that our casualty platform already powers several top 20 insurers, including multiple in the top five, reflects the strength and quality of our offering. We continue to believe casualty has the potential to be multiple times its current size and over time, possibly as large or even larger than our current insurance APD business. In Q2, we had contract renewals and expansions in casualty with a top 10 and a top 20 insurer. In addition, the late April announcement about the integration of Evolution IQ's AI-powered medical record synthesis solution, MedHub, into CCC's casualty suite is generating positive engagement with our auto insurance customers in that solution. We also have strong interest in our next planned expansion of Evolution IQ's capabilities into auto, which claims guidance with many customers asking to evaluate the solution as soon as it's ready. Evolution IQ continues to see solid momentum across its core disability and workers' compensation solutions. In Q2, EvolutionIQ renewed and expanded contracts with multiple top 15 disability carriers, including the addition of MedHub. EvolutionIQ has a strong and growing pipeline of top 20 P&C insurers for its workers' compensation suite, as well as MedHub Auto. We continue to view Evolution IQ as a key strategic asset and a catalyst for cross-selling our casualty suite into our APD client base of over 300 insurers. This positive momentum in adoption is not limited to our insurance clients. We're also seeing strong adoption by repair facilities of both our AI and non-AI-based solutions. And here, too, positive results from some of our largest customers give us confidence in the long-term potential of our newest offerings. For example, one of the leading multi-store operators, or MSOs, is already using our visual AI-based estimating solution, Mobile Jumpstart, to prepare over 95% of their estimates. We view this as a leading indicator for adoption in the industry and an example of how our most sophisticated clients are leveraging our AI-based tools to improve operating efficiency and setting the pace of innovation for the industry overall. Another example is the continued adoption of bill sheets, our accuracy-enhancing part selection tool, which is now being used at over 5,000 repair facilities. This represents a nearly 20% penetration of our repair facility client base in just one year after launch in July of last year. And with diagnostics, CCC continues to expand its coverage across diagnostics providers on the network, enabling repair facilities to work with more providers through an integrated workflow that streamlines administration and improves transparency. While still early in the adoption cycle, we are encouraged by the success we've had in the second quarter in increasing customer usage of our newer solutions. We believe customers are just scratching the surface of deploying AI to increase efficiency and generate a durable competitive advantage in their business. It will take time for these new contracts to materially contribute to revenue. But we expect that contribution to build as use cases expand and clients send more volume through these solutions. As we have seen in the past, our leading early adopter customers set up the next wave of adoption so the progress we saw in Q2 reinforces our confidence in our long-term growth opportunity. My second theme is our continued focus on balancing operational efficiency and investment in innovation. Our recurring revenue subscription model, single unified code base, scalable cloud infrastructure, and seasoned development capability combined with our efficient go-to-market model gives us a highly flexible and scalable business model. This enables us to continually invest in innovation throughout economic cycles. And our clients understand that a significant portion of the fees they pay us is reinvested into future innovation that ultimately benefits them. In order to maintain this virtuous cycle, we are constantly focused on identifying new ways to improve CCC's operating efficiency. Over the past few years, We have made investments that have significantly improved the scalability of our business, including building out the IX cloud architecture, streamlining our product development process and driving synergies across our proprietary datasets. More recently, like our customers, we are starting to see the benefits from leveraging AI internally to help drive the next phase of CCC's operational efficiency. We're using AI to save time, reduce errors, and to do things faster and smarter, from helping to write code and protect systems to helping hire the right people. CCC has always been at the forefront of AI, and we see these initiatives as a continuation of that trend. These investments further strengthen the scalability of our business model and improve our ability to deliver better solutions to more customers faster, decreasing their time to value and increasing their ROI, all while continuing to increase our annual investments in innovation. My third and final theme is the power of combining our interconnected network with our unique data and AI-enabled solutions. It is this combination that enables us to address our clients' current and future operational challenges. And the value of this combination was very evident to me at a recent customer conference in Frisco, Texas, a three-day event that was attended by over 300 customers. The foundation of our business is our interconnected network of over 35,000 businesses that we have built over the long term. One of my favorite parts of our customer conference is seeing this network in action at the advisory councils, which brings together about 100 senior executives from across the auto insurance ecosystem, including auto physical damage, or APD, and casualty professionals, OEMs, subrogation teams, and repair facilities. These leaders convene to share operational challenges and offer feedback on CCC solutions, which we use to help inform our R&D priorities and address their evolving needs. What was clear from my interaction with clients during the conference? was that the operational challenges you heard me talk about in the past, rising complexity of vehicle technology, labor shortages, geopolitical uncertainty, continue to get more challenging. And our clients are looking to CCC to help them navigate this once-in-a-generation digital transformation of the auto insurance economy. One example of the combination of our interconnected network and our AI-enabled solutions is the IX Cloud. Our event-based architecture, which enables the over 35,000 businesses on our network to set up and manage notifications for relevant business events and configure actions based on those events using AI. We expect the IX Cloud to facilitate a stair-step increase in connectivity across our network and to help create more continuity across the claims ecosystem. This will make the network faster and easier for customers to deploy new CCC solutions and for customers to use multiple CCC solutions together. As these solutions work together, their benefits are amplified. We believe the combination of our industry-leading AI, scalable multi-tenant platform, and deep multi-sided network position us as the partner of choice for this digital transformation. Over time, we believe CCC Solutions will be able to help manage an increasing portion of the lifecycle of claims and repairs. Before I finish, let me provide an update on our board of directors. I'd like to welcome new independent board member, Barak Ailam. Barak is the former CEO of Nice Systems and has over two decades of experience in enterprise software, AI, and customer engagement technologies. His proven ability to scale organizations and champion customer-centric innovation will be a great help in our next phase of growth. I also wish to thank Chris Egan of Advent International who stepped down from the board earlier this year. We are deeply grateful for Chris's guidance, leadership, and support since joining the board in 2017 as part of Advent's investment in CCC. Let me conclude by reiterating the strength of our performance in the second quarter and how we are positioned for success going forward. Every day, our customers face the challenge of helping over 50,000 people affected by auto accidents. CCC plays a critical role in delivering continuous innovation that enables our customers to better serve their customers. We believe there is an enormous opportunity in front of us to help our customers reduce cycle times increase operational efficiency, and improve consumer experience across the auto insurance economy. I will now turn the call over to Brian. We'll walk you through our results in more detail.