Q2 2022 CCC Intelligent Solutions Holdings Inc Earnings Call
And over that time, our revenue base has become increasingly large and diversified we began with one product.
Digital total loss solutions sold to one customer segment insurers.
Today, we provide dozens of products across multiple customer groups, including insurers repair facilities parts suppliers Oems dealers and others.
That resilience held up during the black Swan event of the pandemic, where ccc's revenues still grew 5% year over year.
Another differentiating characteristic of Ccc's business model is that we sell solutions into the business side of the insurer versus the it side and delivering ROI based on tangible claims results that directly impact the issues I mentioned before inflation supply chain.
Challenges and labor shortages and vehicle complexity.
Because all of our clients are already on the CCC cloud most implementations take place in less than 90 days.
What we're not doing.
Is multi year tech modernization projects for insurers core policy and underwriting systems.
This means we are able to deliver fast time to value that can deliver better business results in a matter of weeks or months and not years.
The durability of our customers' businesses has enabled us to structure our business in a way that we can operate profitably throughout economic cycles, and ensure our ability to continuously invest in R&D on our customers' behalf.
This wraps up my first theme resiliency of our business model the.
The second broad theme I'd like to talk about today is the growing momentum of estimate SPP with insurers.
The pressures being felt throughout the auto insurance economy are increasing demand for straight through processing arc STP.
STP refers to the processing of transactions digitally and automatically and is most commonly associated with a financial services industry, particularly areas like payments and securities trading.
I believe that the financial services vertical is running several years ahead of the insurance industry and their adoption of STP.
We estimate there are tens of billions of dollars of efficiencies that we can help our customers unlock over time.
Ccc's most recent SDP innovation is estimate STP there.
There are hundreds of potential applications of STP within the auto insurance economy.
We chose the auto claims estimate writing process not because we thought it would be an easy first step, but because we knew it would be the toughest application to figure out.
And we knew that if we could get that right.
Actually create an industrial grade AI system that could right line item insurance claims estimates requiring minimal human intervention.
That that would pave the way for the adoption of a much broader suite of applications, we rollout estimate STP to our first insurer in November last year.
Six months later on our Q1 earnings call in May that number of insurers who was up to eight.
Since then we have added three more and are now up to 11 insurers, which includes more than half of the top 10 auto insurers in the United States.
That said, it's still early days for estimate STP.
Adoption varies greatly by insurer and aggregate volume today doesn't yet moved the needle.
But insurers are becoming increasingly comfortable with less and less manual interventions in the automated estimate creation process.
Another exciting aspect of this phase for US is the substantial scale of real time feedback, we're receiving on a daily basis.
This enables our teams to refine and adapt our AI models to solve for various edge cases that you only see at our scale.
Consumers are also increasingly comfortable.
<unk> and uploading photos.
The damaged car and delighted when the estimate is processed in minutes.
We therefore expect adoption of estimate SDP to accelerate meaningfully over the next 36 months.
We believe the majority of the more than 15 million repairable claims in the U S.
We'll be eligible for estimate STP over time.
And with insurers currently spending as much as a 150 to $200 to manually preparing estimate digitizing that process with a strong ROI to customers represents a multi hundred million dollar long term opportunity for CCC.
Given the number of decisions and manual touch points that existing processing of claims today.
We believe estimate STP represents a foundational entry point into a much broader opportunity set across the insurance economy.
We have dozens of use cases, we are evaluating to add digitization or automation ranging from subrogation to total loss to casualty.
We believe that a key differentiator, which position CCC to successfully create and deliver STB solutions, while the auto insurance economy is our self reinforcing and connected ecosystem.
This ecosystem connects to many diverse participants in the auto insurance economy, including insurers repair facilities part suppliers Oems lenders and many others.
Ultimately to truly deliver the automation and streamlining of that ecosystem and industry participant needs to be connected to all other participants.
<unk> enables that interconnectivity and the growing operational efficiency that interconnectivity delivers to the network participants.
The third and final theme I wanted to touch on today is the notable progress we are making in dealing with the complexity of vehicles are. Good example of this is our diagnostic solution, which can be utilized but anyone and our growing network of 27500 repair facilities.
On our Q1 call, we talked about the growing importance of diagnostics and the accident repair process as vehicles include increasingly sophisticated technology, such as automated cruise control Lane departure warning systems and multiple cameras.
The proliferation of these technologies as amplified complexity and increase the necessity of scanning diagnostics and calibration and the repair process.
Our solution CCC diagnostics integrates diagnostics data and invoicing into the repair facilities workflow and collaboration with insurers increasing efficiency for everyone involved.
This solution is also seamlessly integrated into the CCC, one repair platform, which currently processes about $60 billion of.
Of collision repairs a year.
In July <unk> diagnostics became part of the CCC diagnostics network.
Airport joined three other leading diagnostic service providers, Aztec opus and Honda and integrating directly into <unk>.
It's still early days for diagnostics today.
Today, only about 10% of our 27500 repair facility customers subscribed to CCC diagnostics.
We continue to see growth in the number of vehicles, requiring scans as well as the long term potential to deploy additional diagnostics related solutions grew care facilities insurers and Oems.
We feel increasingly confident about diagnostics as a $50 million to $100 million revenue opportunity for CCC.
We continue to invest in innovation that will help solve a broad array of challenges across the auto insurance economy, and one of the benefits of having a balanced portfolio is that we are not dependent on the timing of any one opportunity to drive growth.
Payments for example is a large opportunity that continues to move forward as we validate use cases and workflows with customers and we're pleased with the progress we have made there.
<unk> diagnostics is an example of an innovation with strong early adoption and given this pace. We expect the diagnostics will contribute a full point of revenue growth in 2022.
Our diversified portfolio of solutions solve multiple use cases for customers, regardless of which operational challenge any given customer is most focused on solving in the near term.
Our product pipeline is as full of opportunities today as I've ever seen in decades.
Our clients need our help to become more efficient and are actively engaged with us as we develop solutions that meet their needs.
We have a time tested resilient business model that has delivered revenue growth and profitability for 30 years.
Today I'll focus on two products from our portfolio of growth opportunities the insurance industry's growing adoption of estimate SDP to drive a step change improvement in operational efficiency and consumer experience and repair facilities increased use of our diagnostics related capabilities to streamline their workflows.
That said, we continue to see progress across our portfolio of sizable growth opportunities and are excited about the potential in front of us I.
I will now turn the call over to Brian will walk you through our results.
Thanks to potash.
Before we jump into the numbers I wanted to take a moment to acknowledge that we passed our one year anniversary as a public company earlier this week.
It's been a gratifying year operating as a public company and at the same time, a challenging year overall for the capital markets. We remained.
<unk> focused on what we can control, which is delivering innovation to our clients to support them in solving some of their more difficult operational challenges.
So we continue to be confident in our ability to achieve our near term and long term operational targets and to generate value for our customers and our shareholders.
As we turn to the numbers first I'd like to review our second quarter 2022 results and then discuss our updated guidance for the second half and full year 2022.
Total revenue for the second quarter was $192 8 million up 16% from the prior year period.
Approximately 12% of our revenue growth in Q2 was driven by cross sell and up sell into our installed client base.
<unk> broad based adoption of our digital solutions like mobile AI and engage.
About four percentage points of the 12% came from the large expansion deals signed in the second half of last year that we've been talking about for the past several quarters and.
An incremental 4% came from new logos, mostly repair shops and part suppliers.
I would also note that 99% of our revenue in the second quarter was domestic.
Now turning to our key metrics.
Software gross dollar retention or GDR captures the amount of revenue retained from our client base compared to the prior year period.
In Q2 of 'twenty to GTR was 99% consistent with last quarter. We believe our software GDR reflects the value we provide our customers and the stickiness of the network effect.
Software GDR as a core tenant of our per Actable and resilient revenue model.
Software net dollar retention or <unk> captures the amount of cross selling upsell from our existing customers compared to the prior year period.
As well as volume movements in our auto physical damage client base.
In Q2, 'twenty two software <unk> was 111%, which is above our historical average.
The consistently strong and Dr performance in recent quarters reflects the success, we've had with our cross sell and up sell opportunities across our client base.
Including the large expansion deals signed in the second half of last year.
Andy hours, a core driver in our business and we have excellent opportunities to execute this for the foreseeable future.
Now I'll review the income statement in more detail.
As a reminder, unless otherwise noted all metrics are non-GAAP and we've provided a reconciliation of GAAP to non-GAAP in our press release.
Adjusted gross profit in the quarter was $148 4 million with adjusted gross profit margin of 77%, which is consistent with the second quarter of last year. We continue to feel good about the operating leverage and scalability of our business.
And being able to deliver against our long term target of 80%.
In terms of expenses adjusted operating expenses were 81, 7 million, which grew 12% year over year.
Growth in these expenses were largely driven by head count additions public company costs and the increase in discretionary spend.
These expenses continue to normalize including hosting our in person industry conference during the quarter.
On the head Count point, we are pleased with the progress made to advance our operational capabilities by adding key positions across product management and product development.
We feel we're in a strong position to continue to deliver ongoing innovation into the market and executing against our strategic agenda.
Adjusted EBITDA for the quarter was $73 $4 million with a 38% adjusted EBITDA margin.
Adjusted EBITDA grew 22% year over year and margins improved 200 basis points compared to Q2 of last year.
Margin expansion reflects operating leverage from our efficient and scalable business model as we continue to scale revenue.
Yes.
Turning to the balance sheet and cash flow, we ended the quarter with $228 million in cash and cash equivalents.
And $796 million of debt at the end of the quarter. Our net leverage was approximately one nine times adjusted EBITDA.
Free cash flow in the quarter was $29 6 million compared to $13 1 million in the prior year period.
Year to date, we have converted approximately 49% of our adjusted EBITDA into Unlevered free cash flow.
Normalizing for the timing of our annual incentive payout.
And estimated tax payments in addition to the completion of the build out of our new headquarters in Chicago.
Adjusted Unlevered free cash flow would have been in the low 60% range year to date consistent with historical results.
Now I'd like to finish with guidance beginning with the third quarter.
We expect revenue of $194 million to $196 million. This represents 10% year over year growth at the midpoint.
We expect adjusted EBITDA between 72 to 74 million, which represents a 37% adjusted EBITDA margin at the midpoint.
For the full year 2022, we expect revenue of $773 million to $777 million, which represents 13% year over year growth at the midpoint.
We expect adjusted EBITDA between 294 to 298 million, which represents a 38% adjusted EBITDA margin at the midpoint.
Implicit in our Q3 and full year guidance is the guidance for the fourth quarter.
For which we expect revenue between $199 million to $201 million, which represents 7% year over year growth at the midpoint, we expect adjusted EBITDA between $75 million to $77 million, which.
Presents a 38% adjusted EBITDA margin at the midpoint.
Three points to keep in mind about our second half guidance.
The first is that we are lapping the large expansion deals we signed in the second half of last year.
These deals contributed 5% of growth in the first quarter of 'twenty two four points of growth in the second quarter of 'twenty. Two we will get about one point of benefit from these deals in this third quarter and no benefit in the fourth quarter.
The second point is that we had two percentage point contribution from non recurring revenue in the fourth quarter of last year. This now creates a two point revenue headwind for us in the fourth quarter of this year.
My point is the implied fourth quarter revenue range of 7% to 8% of growth.
Without the two point headwind would be 9% to 10% growth in the fourth quarter.
The third point is that our adjusted EBITDA margin forecast for the full year remains unchanged. We expect adjusted EBITDA margin will be flat for the full year 2022, following 800 basis points of expansion between 2019 and 2021.
We continue to be focused on investing in innovation to support our growth ambitions, while at the same time progressing towards our long term mid <unk> adjusted EBITDA margin targets.
Overall, our guidance reflects our confidence in the underlying momentum of the business we.
We feel good about the strategic position of the long term opportunities in our product portfolio.
Today, we highlighted two of our emerging solutions.
<unk> STP and diagnostics, but we have many other exciting opportunities in the portfolio across both our emerging solutions like subrogation and payments as well as our more established solutions like casualty the repair shop packages and engage.
CCC is well positioned to deliver on our financial and operating targets for the year.
Need for Digitization across the P&C insurance economy continues to accelerate and CCC is well positioned to drive durable growth in revenue and profitability in the near and long term.
We are confident in our ability to deliver on our long term organic revenue growth targets.
7% to 10% next year and beyond.
As we continue to execute on our strategic priorities. We believe we will generate significant value for both our customers and our shareholders.
<unk> with that operator, we're ready to take questions. Thank you.
Thank you, Sir ladies and gentlemen at this time, we will be conducting a question and answer session.
If I can ask a question. Please press Star then one on the telephone keypad.
Confirmation kind of indicate taking non easing the question queue.
Q my place.
Like to remove yourself from the question Kim.
Call participants Haas speaking.
We're using speaker equipment, it may be necessary to pick up the handset.
Chris Lucas Junkies.
Furthermore, in the interest of time, we ask that you limit.
Could you please limit yourself to one question and one follow up.
And just remind me if I ask the question you are welcome to place John and then one.
The first question comes from.
And then they can offer premium play.
Hey, guys nice job and I. Appreciate you taking the question here I guess, maybe first for good cash as you think about growing that product adoption kind of within your existing customer base here you touched on the immediate ROI side of the equation, how valuable is that especially in the current environment, where they're kind of trying to.
The hammer down relative to the expense side of the equation and to deliver that value and align it with customer interest that maybe contributes to that initial kind of faster inflection point, just just given the fact that you've been able to deliver so much value for these customers historically.
Hey, Thanks for joining absolutely in fact, that's one of the big benefits of being on the CCC cloud and.
And having a very short implementation cycle.
Again, what we're seeing is the ability to deliver pilot and put into production.
Not just put into production a single product or a solution.
But to be able to deploy it on a national scale across 50 states. Many of our customers operate in every state many regional they usually try and test in one or two geographies and once it works and solutions deliver the results. We're able to also scale it pretty rapidly. So we are.
Seeing increased <unk>.
Demand from our customers to be able to move faster, which is why I made the comment that many of our customers for many of our early solutions are actually saying, Hey, I would like to be first.
Yes that makes a ton of sense and I wanted to dig into the scale side as well since you've talked about some of the traction youre seeing in particular, maybe.
Maybe maybe.
You're touching on FTP here, how valuable is again the scale of your network the scale of that data infrastructure to deliver upon those automation capabilities right. It seems like.
Big paint.
Pain point in the industry something people are looking to address but it's probably not something that can just be.
Put together overnight right you have to have the historical data, which you guys have on your platform, but how do you think about.
The complexity of that offering the data advantage you guys have and how that speaks from a competitive standpoint as well. Thanks.
Sure. So so scale really comes in the following very specific ways right. So first and foremost when you were thinking about refining our AI solutions like estimate STB that I talked about.
The fact that we collect 500 million photographs a year.
And we are processing literally billions of dollars of renewables in total losses per months.
What we're getting is as more and more customers to deploy and I think I mentioned that over half hour.
Half of that.
National carriers, representing I guess the majority.
<unk> in total loss in the country start to adopt the solution. So what that does is the scale of feedback when you have thousands of people using your solution, especially we will refine your AI the speed at which we can refine the AI deal with edge cases.
Sunlight, reflecting on a light blue car standing under a tree.
In South Florida, right. So there's all these edge conditions and our scale.
Hows is to do that pretty rapidly. So that's one element of scale.
Pure volume across every state across different functions.
Second aspect of scale is that we are running and have been running on a highly efficient cloud based platform. So it will be elastic cloud, we are able to scale up and down and take a customer and deploy them often that is one of the hardest things for a customer to do it.
How do I change the behavior of tens of thousands of people across the country with my tools.
And what we're able to do is to deploy that at the point at which decisions are made by individual adjusters.
<unk>.
Our parts providers and alike, and actually deploy that pretty rapidly and that is the second element of scale.
And third and maybe the last element of scale I would point out.
As the network itself when you have 300 insurance customers, joining 7500 collision repair facilities.
Thousands of parts providers almost every OEM that third element of the interconnected model, where sometimes to actually implement a solution you don't need to just do it for that one customer, but you have to be able to do it across the ecosystem that is a third element of scale.
Hope that answers your question.
No incredibly in depth.
<unk> and congrats again guys.
The next question comes from Katherine <unk>.
Ofcom from Saks.
Hi, This is Kelly on for Gabrielle.
Congrats on the quarter My question would be kind of building off the competitive question from before on how are things going on the casualty side of the business and have you noticed anything.
Different on that side and so anything changed regarding your confidence at CCT can take share in that market.
Yeah, I would say.
Thanks for joining us I would say, we absolutely are seeing that the year. Some investments that we have made in the casualty platform, particularly for third party and also both first party and the technology and the investments. We've made we are continuing to see adoption increased adoption of.
<unk> and feel pretty confident about.
What we're seeing and how we are engaging with customers and again as you well know casualty in terms of.
Share of customers, we have farce.
Smaller scale.
Customers much smaller customer base and casualty when you compare it to our auto physical damage products.
It presents a very nice growth opportunity.
Okay, Great and then my follow up is just can you give us an update on safe keep how does adoption trending and what have you been hearing from customers.
Sure.
On safety.
Customers seem delighted.
And that's really does two things for us.
For many customers who are already using <unk> solutions.
This is a very natural fit in terms of both.
For subrogation, which is whereas you know billions of dollars of spend so we've also trained our own teams that work with customers and the receptivity across the board has been terrific. So that's on one that on the second side I would say that.
The team we have brought on board on sub role has been fantastic.
Their depth their knowledge and frankly the development after solutions the integration of various components, even things as one to aim that.
Light building for example, cyber Monday, and it's important right security. So many of those integration components are also coming along well so we feel good.
Some of those two perspectives.
And thank you for the color and congrats again on the quarter.
Thank you.
The next question comes from David Kelley of Jefferies.
Hey, good afternoon. Thanks for taking my question wanted to start with diagnostics in light of the addition of air Pro Tier networks last quarter. I believe you spoke about the potential for $50 million to $100 million of revenue opportunity.
Highlighted today.
<unk> of growth potentially this year from diagnostics from our end it seems like you've cornered both the remote scanning and OEM market. So I guess my question is can you talk about the process of getting more of those repair facility customers on the diagnostic network.
And maybe how you think about the potential timeline to ramping revenues up to that $50 million to $100 million run rate.
Sure David.
Again.
You have to think about diagnostics and really maybe it's three components.
<unk> is the absolute need for diagnostics and over the years, what we've seen is that some vehicle complexity has increased there is a substantial need to essentially scan the car after an accident.
The diagnostic support tells you what did that can be damaged in the car.
After you complete the process of repair.
The scan and the calibration sometimes has to be done so as for older cars. It was not mandatory but for almost every new car and the last producer the last few years.
First and foremost the need to do scanning across the board and to have consistency.
And transparency for repairs insurers that's been Super supercritical.
So what we've done is that the <unk>.
Second thing we have done so thats first and foremost secondly, when you look at the way our solution works is that we have integrated deep into CCC, one excuse me.
Thinking about any given day, you've got tens of thousands of people who are engaged in the process of repairing vehicles living.
Living in the CCC system every day, whether it is on the CCC tablet, whether it is our mobile tools, whether it is on the desktop as theyre going about ordering parts repairing the cars.
Doing production scheduling and the like so integrating diagnostics capability directly into that repair process and into that step. So that it is a seamless component of it and making that available to.
Our entire collision repair customer base is super important.
Where we are today is after literally a few months, we rolled this out to 10% of our customer base.
So that's another element of scaling it is to make sure that the process of all of that we're extremely tightly.
The last element of scaling diagnostics and maybe a very important element is.
As we work with different providers, we started with opus.
They were our first <unk>.
Engagement on diagnostics, we've added as you know we've added Aztec and now we've added <unk> and we will continue to add other providers because it makes it very very seamless for these diagnostics providers to be able to service their end customer, which is a repair facility.
So those are really kind of three ways three components.
To think about how we scale diagnostics.
Our confidence in continuing to scale this to that $50 million to $100 million Mark.
Okay got it that's helpful. Thank you and then just as a follow up I wanted to touch on the new logo contribution I believe it was 4% in the quarter stands out given its typically a secondary growth contributor for you. So you can can you talk a bit more about where you saw new logo track.
<unk> in the quarter and maybe some breakout between repair facilities versus.
Youre growing part supplier network.
Yeah, Hi, it's Brian here, Yeah, I can cover that yeah, so four points for the quarter.
As you said it largely comes in two areas. It is the repair facilities. So the shops and it's the part supplier, we don't break those out on percentages, but the repair facility shops is the largest piece.
If you look over.
At a historical average we add about 1000, new rooftops a year from our repair facilities and we're trending again towards towards a metric like that.
The largest driver of the 4% on new logo.
Okay perfect. Thanks for taking my questions.
Thank you.
The next question comes from Kirk Mcmillan of Evercore ISI.
Hey, guys. This idea here.
Okay. Thanks.
Good question.
I guess just a question on payments.
Conversations are you guys.
Having I know you mentioned that you signed your first customer there last quarter, but.
And then in terms of contributing to revenue or do you kind of see that being more meaningful in 2023 24.
Yes.
First of all.
Joking aside we're not providing guidance today for 'twenty or 'twenty forward.
And what we are doing on the payments front is our first goal is to get the payments infrastructure in place. We did that second was to work with customers to refine the use cases, and then start building up the customer pipeline.
So we've worked through all of those things and then we are working closely right now with customers and going into kind of some of the specific nuances of different conditions right with its sharp to carrier to chop payments or other areas and we're kind of working through those.
Specific use cases with customers again as I mentioned, it will not be a material contributor.
This year.
Got it and then just a quick follow up if you have any color on hiring or head count kind of with the market today just curious.
Sure I'll give you a kind of a macro thoughts and then Brian will give you maybe a couple more specifics.
I would say that.
In some ways.
What we have seen.
More lately than we did towards the end of Q1 is.
Is that we are able to hire faster in terms of some of the key talent that we need in terms of people servicing our customers' engineering talent and product management talent. So we've actually seen a pick up in our ability to recruit.
And we've seen that shift and change in the employment markets.
And we feel good about our ability to continue to recruit and I don't know, Brian if you want to add anything specific to that.
Yes, I would just add that we've been focused largely in product development and product management, where we've been adding heads really thinking about the innovation funnel on the roadmap.
Bringing new products and new capabilities into market. So that's been the area. We've been really focused on and the pacing has been good we've talked about this year holding margins.
At.
38%.
And a large part of that reason, we're holding it is really around bringing on the head count both at a capability and capacity perspective. So we feel good on an hour we're executing against that.
Got it. Thank you for the color guys I appreciate it.
Yes. Thanks.
The next question comes from Chris <unk>.
<unk> Securities.
Hey, good afternoon, guys. Thanks.
Thanks for taking the question or two.
It's coming up but it's about a year. Since you guys went public maybe just one or two kind of more big picture questions. Obviously, you're already the clear leader in the U S. I recognize there's lots of white space in the U S to attack.
Looking at Europe , you know understanding it's a much more fragmented market is the raison. There is is there still an opportunity.
CCC longer term to be an important player there.
Sure.
Sure.
First things first Chris the.
Exactly the Big picture as you pointed out is the white space, especially for our products, especially as we think about estimate STP and the broader opportunity for STP is substantial.
And if you take the combination of our new products that we're building, including STP. The existing solutions, we have which have a lot of opportunity we are first and foremost.
Foremost feel we can address all of our growth with just the white space in the United States.
That said, we continue to get invited by customers will keep asking us to come into as you know the five countries of Europe amount for the largest number of auto claims in auto insurance.
And the opportunity continues to exist.
And we're going to be very selective and very thoughtful in terms of where and how we entered the European market.
Got it I appreciate that.
Staying with that theme, so you've talked about the P&C industry generally not being cutting edge that digitization can be painfully slow do you expect it to continue at that same pace or in the foreseeable future is is there a reason to expect there would be a meaningful inflection point at some point.
The next three to five years.
That was one of the things Chris that we saw at <unk> for example, even the latest industry conference. We've been holding these conferences with our customers for so many years.
And what is really exciting to see is the amount of innovation. Our customers are interested in deploying not just testing a crying, but testing and trying with an eye towards deployment and it is the deployment capability for example, <unk>.
<unk> recorded to you about estimate STP. So the precursor to estimate SDP was a product called smart estimate.
When we build smart estimate.
We introduced the ability to jump start an estimate using photo and AI.
Had dozens of customers adopt them the first year and then as we move from there to estimate STP. Many of our customers are doing a lot of fine tuning and adopting so we are actually seeing that many of our customers and we're so blessed with some amazing customers. We're also working very close.
With us on many of these innovations with an eye towards not testing, but towards an eye towards rolling out. So I do think the pace of Digitization is going to continue to pick up.
<unk>.
Hence our desire to continue to invest on a pretty broad set of solutions.
I appreciate it I'll leave it there thanks guys.
The next question comes from Tyler Radke.
Please proceed.
Hey, Thanks for taking the question and great to see you at the conference a few months ago. Just on that note. Obviously was a strong new logo quarter. I'm curious why you think that was was it just timing and on the theme of the conference just being back in person.
<unk>.
Any observed impact that you've seen that had just in terms of pipeline generation or expansion activity. Thank you.
Hey, Tyler first of all thanks for coming to the conference and and.
And as you saw.
The products and the solutions, we displayed at the conference.
Great meeting, but the conference itself doesn't really change things dramatically one way or the other what it does is give a very broad exposure and allows us to really tune our solutions a lot more.
So I would not say it was the conference per Se. It is just that we've continued to enroll and adopt.
<unk> solutions, but the speed of Digitization.
As it picks up and customers feel more of the macro pressures there are more driven towards deploying these solutions I don't know, Brian if you want to add any qualification to it.
No I think you've covered it well.
To the earlier point I would say the momentum at the repair shops have been particularly strong over the last several quarters and really underpinning the new logo performance and we see that.
We see the opportunity for that to continue going forward. So we feel really good about that.
Momentum and traction we have in the marketplace.
And I think that the 4% reflects that.
Also volume is increasing of the repair facilities right S collisions are increasing the ability to hire people.
Continues to be a shortage on the repair side. So people are also looking for more and more efficiency.
Service the demand.
Okay.
Yes makes a lot of sense.
Just as you think obviously you are not don't.
You don't have things like.
Foreign currency exposure and not particularly large deal dependent I guess.
You do have larger deals with some of the.
Tier one insurance carriers.
Are you just thinking about the pipeline there for expansions.
And what are you.
Assuming anything different in terms of expansion rates in the back half just given the changes in the macro environment for where you do have kind of larger larger deal exposure.
Tyler the short answer is really no major change.
And then for exactly the reasons I described at the beginning which is we are fully deployed we can bring these solutions up and running it does not require a multiyear hundreds of millions of dollars.
Expense.
Basically these solutions can be integrated for relatively small dollars in the auto line to pay off as relatively huge so.
So we don't see any change, especially given the architecture of our platform and the way we deploy our solutions.
Yes, Tyler it's Brian I would the only thing I would add is clearly we feel good about the pipeline the resiliency of the business model and that also reflects the raise we put in the second half of the year as we have line of sight to the key deals that need to land.
And our overall confidence for delivering the second half and the full year.
Yeah.
Great I appreciate it.
Okay.
The next question comes from Gary.
Christa <unk> Barrington research.
Hey, good afternoon all.
Cash with this estimate STP.
I'm, assuming this is a fairly new product.
Insurance carriers or uptake in.
What have you seen as far as the adoption once they get this product.
Usage to process claims within their organization.
Hey, Gary.
I would say.
We're seeing a wide variation right so because it has literally.
<unk> and hundreds of parameters that require tuning.
The AI and making adjustments so customers have different requirements, but for needs and what we're seeing is.
Some of the early adopters move faster some people use it for relatively small amount of volume.
And even products like photo photo channel.
We're almost up to now we've gone from 20% to 30% adoption, even there we've got some customers using it at 3% and some customers are 97%. So with estimate STP everyone is across the board Super excited because it's integrated deeply into our estimating platform.
And the and and.
So I would just say it varies but customers as I also mentioned.
Ride it out in one or two states somewhat people who've tried in three states and then somewhere in the process of rolling out. So so we have a pretty broad range.
Of adoption, but the exciting thing is.
Now have line of sight to half of the over half of the industry adopting the solution.
Okay and do realizing this is a software product.
You have a mechanism to price this.
Based on increased usage as you go forward.
Okay.
The short answer is yes.
Okay.
Thank you.
Thanks.
Thank you ladies and gentlemen, we have reached the end of the question and answer session.
Now turn over to call to get tissue.
<unk> for closing remarks.
Well, thank you all for joining us today.
We are proud of our performance during our first year back in the public markets.
And most of all I want to say, thank you to our customers our CCC team members and our shareholders for their help in making that a reality.
As we mentioned we remain confident in our ability to continue to deliver on our strategic and financial objectives.
And the strategic build resilience of our business model continues to come through as we deliver innovation and operational efficiency for our customers. We look forward to talking with you on the third quarter call in early November if not sooner. Thank you again for your continued interest in CCC on behalf of all of my car.
Let's see.
Thank you, ladies and gentlemen that concludes today's conference.
Thank you for your participation and you may now disconnect your line.
Yes.
Okay.
Okay.
[music].