Q4 2023 CCC Intelligent Solutions Holdings Inc Earnings Call

February 28, 2024

[music].

Operator: Good day, and thank you for standing by. Welcome to the CCC Intelligent Solutions fourth quarter fiscal 2023 earnings call. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by and welcome to the C. C. C. Intelligent solutions fourth quarter fiscal 2023 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during this session.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Warmington, Vice President of Investor Relations. Thank you, operator.

Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Bill Warmington, Vice President of Investor Relations.

Thank you operator, good afternoon, and thank you all for joining us today to review <unk> fourth quarter 2023 financial results, which we announced in the press release issued following the close of market today joining.

William Arthur Warmington: Good afternoon, and thank you all for joining us today to review CCC's fourth 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 Githesh 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 our 2023 annual report on Form 10-K filed today with the SEC. Further, these comments and the Q&A that follows are copyrighted today by CCC Intelligent Solutions Holdings Inc. 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.

Joining me on the call I get attached Ramamurthy, Ccc's, chairman and CEO and Brian Herb CCC CFO.

Are we 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 implementation of the company's plans to vary materially. These.

These risks are discussed in the earnings release is available on our Investor Relations website and under the heading risk factors in our 2023 annual report on Form 10-K filed today with the SEC.

Further these comments and the Q&A that follows are copyrighted today by CCC Intelligence solutions Holdings incorporated.

Any recording retransmission reproduction or other use of the same for profit or otherwise without prior consent of CCC is prohibited and a BIOLASE and of United States copyright and other laws. Additionally, while we can provide a transcript of portions of this call and we have approved the publishing of a transcript of this call by a third party, we take no risk.

William Arthur Warmington: Additionally, while we will provide a transcript of portions of this call and we've approved the publication of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in the transcript. Please note that the discussion on today's call includes 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. A reconciliation of GAAP to non-GAAP measures is available in our earnings release, which is available on our investor relations website. Thank you. And now I'll turn the call over to Githesh.

Possibility from an accuracy that may appear in the transcripts.

Please note that the discussion on 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.

A reconciliation of GAAP to non-GAAP measures is available in our earnings release that is available on our Investor Relations website.

And now I will turn the call over to catastrophe.

Githesh Ramamurthy: 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 performance to complete another record year in 2020. For the fourth quarter of 2023, CCC's total revenue was $229 million, up 12% year-over-year, and ahead of our guidance. Adjusted EBITDA for the fourth quarter was $100 million, up 25% year over year, and adjusted EBITDA margin was 44%, both also ahead of our guide, Revenue for the full year 2023 was $866 million, up 11% year over year, and well above the high end of our initial 2023 guidance, Adjust the EBITDA for the full year 2023 was $353 million and adjust the EBITDA margin was $41 million, also well above the high end of our initial guidance.

Thank you Bill and thanks to all of you for joining us today.

Pleased to report that CCC delivered another quarter of strong top and bottom line performance to complete another record year in 2023.

For the fourth quarter of 2023, Ccc's total revenue was $229 million.

Up 12% year over year.

Ahead of our guidance range adjusted.

Adjusted EBITDA for the fourth quarter was $100 million.

Up 25% year over year, and adjusted EBITDA margin was 44%.

<unk> also ahead of our guidance range.

Revenue for the full year, 2023 was $866 million up 11% year over year and well above the high end of our initial 2023 guidance range.

Adjusted EBITDA for the full year 2023 was $353 million and adjusted.

EBITDA margin was 41%.

Also well above the high end of our initial guidance range.

Githesh Ramamurthy: We believe our strong performance is a result of growing interest in advanced digital solutions across the PNC insurance market and the trust our customers place in us to deliver those innovations over the past four years, two and a half as a publicly traded company. We have grown our revenue by over 50%, almost entirely organically, from $570 million in 2019 to $886 million in 2023, with a Q4 run rate of over $900 million. Over the same time, we have grown our adjusted EBITDA by more than 100%, from $170 million in 2019, a 30% margin, to $353 million, a 41% margin, in 2023. Q4 was the first time we delivered $100 million in adjusted EBITDA in a quarter.

We believe our strong performance is a result of growing interest in advanced digital solutions across the P&C insurance economy, and the trust our customers place in us to deliver those innovations.

Over the past four years, two and a half as a publicly traded company.

We have grown our revenue by over 50%.

Most entirely organically.

From $570 million in 2000 $19 million to $886 million in 2023, with a Q4 run rate of over $900 million.

Over the same time, we have grown our adjusted EBITDA by more than 100%.

$170 million in 2019% to 30% margin to $353 million or 41% margin in 2023 Q.

Q4 was the first time, we delivered $100 million.

Adjusted EBITDA in a quarter.

Githesh Ramamurthy: Today, I want to focus on what we have done to position CCC for continued growth as we head into 2020. The first is delivering innovation to meet our clients' accelerating demand for AI-enabled services. The second is continuing to grow our multi-sided network. And third, investing in CCC's growth capacity and capability while continuing to expand margin. My first topic is the innovation we are delivering to meet our clients' accelerating demand for AI. While claims and repair cost inflation continues to be a concern, clients are increasingly turning their attention to the accelerating retirement of their workforce. What we're hearing from customers is that they expect between one third and one half of their most experienced workers to retire before the end of the decade.

Today I want to focus on what we have done to position CCC for continued growth as we head into 2024.

The first is delivering innovation to meet our clients accelerating demand for AI enabled solutions.

<unk> is continuing to grow our multi sided network and third is investing in ccc's growth capacity and capabilities.

While continuing to expand margins.

My first topic is the innovation, we are delivering to meet our clients accelerating demand for AI solutions.

I've noticed a significant change in my conversation with clients over the past few months.

While claims and repair cost inflation continues to be a concern climb.

Clients are increasingly turning their attention to the accelerating retirement of their workforces.

What we're hearing from customers is that they expect between one third and one half.

Of their most experienced workers to retire before the end of the decade.

Githesh Ramamurthy: What this means for our clients across the PNC insurance economy is that they are facing the loss of decades of institutional knowledge, which will most likely result in a smaller, less experienced, and higher turnover workforce. Making the situation even more worrisome is that this labor shortage is taking place simultaneously with rapidly rising. As a result, our customers need help closing the skill gap with new and existing work. Quick.

What this means for our clients across the P&C insurance economy is that they are facing the loss of decades of institutional knowledge, which will most likely result in a smaller less experienced and higher turnover workforce.

Making the situation even more worrisome is that this labor shortage is taking place simultaneously with rapidly rising vehicle repair complexity.

As a result, our customers need help closing the skill gap with new and existing workers quickly.

Githesh Ramamurthy: These and other challenges are driving accelerating interest in and adoption of AI-driven solutions across our economy. In 2023, CCC processed the highest number of auto claims in the company's 43-year history. On a cumulative basis, over 19 million unique claims since 2018 have now been processed using a CCC AI-enabled solution. And we have doubled the number of insurers using our AI-based Estimate STP solution over the last year. AI took a large step forward across our portfolio in 2023, and we are well positioned for additional advancement in 2020. For insurers, 2023 saw growth in our AI-based computer vision technology, not just in greater Estimate STP usage, but in expanded input channels and use. First, we extended our mobile AI from consumer self-service to the field adjuster channel.

These and other challenges are driving accelerating interest in adoption of AI driven solutions across our client base in.

In 2023, CCC process, the highest number of auto claims and the companies 43 year history.

On a cumulative basis or 19 million unique claims since 2018 have now been processed using ACC AI enabled solution.

And we have doubled the number of insurers using our AI based estimate STP solution over the last year.

I took a large step forward across our portfolio in 2023, and we are well positioned for additional advancements in 2024.

Insurers 2023 saw growth in our AI based computer vision technology, not just in greater estimate STP usage, but an expanded input channels and use cases.

First we extend our mobile AI from consumer self service to the field adjusters channel and in Q4, we broaden that even further with the introduction of first look a solution designed to enable insurers to ingest and analyzed photos from additional sources, including tow trucks.

Githesh Ramamurthy: And in Q4, we broadened that even further with the introduction of First, a solution designed to enable insurers to ingest and analyze photos from additional sources, including tow trucks, salvage providers, and more so they can leverage AI more flexibly and comprehensively across the claims handling and appraisal process. We also introduced Impact Dynamics, which leverages AI computer vision capability to predict impact severity from vehicle damage photos, enabling earlier and more accurate triage of potential casualty claims based on insurer rules, among other applications. Significant investment in our AI-enabled subrogation solution has also generated strong momentum as we start 2020. Subrogation is the process of one insurer requesting payment from another insurer based on liability for a claim.

Salvage providers and more so they can leverage AI more flexibly and comprehensively across the claims handling.

Appraisal process.

We also introduced impact dynamics, which leverages AI computer vision capabilities to predict impacts severity for vehicle damage photos, enabling earlier and more accurate triage a potential casualty claims based on ensure rules among other.

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Significant investment in our AI enabled subrogation solution has also generated strong momentum as we start 2024.

Subrogation is the process of one insurer requesting payment from another insurer based on liability for a claim.

Githesh Ramamurthy: Tens of billions of dollars in claims are subrogated each year in a highly manual, paper-based process. [inaudible] Customers using our solution have seen significant improvements in subrogation recoveries and in the efficiency of their subrogation activity. And we added multiple new subrogation customers in Q4. For repairers, 2023 saw the introduction of two new AI-based photos. The first was Repair Cost Predictor, which enables collision repairers to quickly provide a predicted repair cost range to consumers. The second was Mobile Jumpstart, which we launched in late Q4. Mobile Jumpstart uses AI to dramatically reduce the time it takes an estimator to generate an initial estimate.

Tens of billions of dollars in claims are subrogate. It each year in a highly manual paper based process costing insurers over $2 billion per year and loss adjustment expense.

Customers using our solution have seen significant improvements in subrogation recoveries and in the efficiency of their subrogation activities.

And we added multiple new subrogation customers in Q4.

For repairs 2023 saw the introduction of two new AI based photo solutions the <unk>.

<unk> was repair cost predictor, which enables collision repairs to quickly provide a predicted repair cost range to consumers.

Second was mobile jumpstart, which we launched in late Q4.

Mobile jumpstart uses AI to dramatically reduce the time it takes an estimate or to generate an initial estimate.

Githesh Ramamurthy: Since its introduction, more than 3,000 repair facilities have already used the solution, with an average time to complete an initial estimate of less than two minutes, versus the traditional industry average of half an hour or more. These innovations are simply transformational for a capacity-constrained industry like mining. At PCC, our goal is to enable the digitization of the entire auto claim supply chain, from first notice of loss all the way through subrogation, which we are advancing by providing solutions that allow our customers to digitize and automate ever more steps in the claims and repair process, eliminating waste, reducing cycle time, and improving satisfaction for our customers and theirs. We believe that the fusion of our industry-leading AI, deep multi-sided network, and scalable multi-tenant platform positions us as the partner of choice for our clients' digital transformation, allowing more and more of a claims lifecycle to be processed using CCC solutions over time.

Since its introduction more than 3000 repair facilities have already used the solution.

With an average time to complete an initial estimate of less than two minutes versus the traditional industry average of half hour or more.

These innovations are simply transformational for a capacity constrained industry like collision repair.

At CCC, our goal is to enable the digitization of the entire auto claims supply chain.

First notice of loss all the way through subrogation.

Which we are advancing by providing solutions that allow our customers to digitize and automate ever more steps in the claims and repair process, eliminating waste, reducing cycle time, and improving satisfaction for our customers and bears.

We believe that the fusion of our industry, leading AI deep multi sided network and scalable multi tenant platform positions us as the partner of choice for our clients' digital transformation and.

For more and more of our claims lifecycle to be processed using CCC solutions over time.

Githesh Ramamurthy: My second topic is the continued growth of our multisider network. In 2023, we expanded our network of customers by adding over 1,000 collision repairers and over 500 parts dealers, while expanding our relationships with several key automotive OEMs. We are now approaching 30,000 repair facilities and 5,000 parts suppliers from the CCC network. We have also renewed and expanded multiple insurer relationships, including a top 20 carrier that's scheduled to roll out a full suite of auto physical damage solutions in Q2 of 2024, as well as several new casualty insurers. We have also expanded our ecosystem, with leading technology and service providers who increasingly see the value of connecting to the broader CCC network. CCC Diagnostics is a good example of the power of the CCC network.

My second topic is the continued growth of our multi sided network.

In 2023, we expanded our network of customers by adding over 1000 collision repairs and over 500 parts dealers, while expanding our relationships with several key automotive Oems.

We are now approaching 30000 repair facilities in 5000 parts suppliers from the CTC network.

We renewed and expanded multiple ensure relationships, including a top pointing carrier thats scheduled to rollout a full suite of auto physical damage solutions in Q2 of 2024 as well as several new casualty insurers.

We have also expanded our ecosystem with leading technology and service providers will increasingly see the value of connecting to the broader CCC network <unk>.

CCC diagnostics is a good example of the power of the CCC network connection.

Githesh Ramamurthy: Since 2017, diagnostics, scanning, and calibration have rapidly become a common activity in collision repair. Everyone involved in resolving a collision has an interest in a quick, quality repair, and the CCC platform is helping the entire ecosystem navigate the advanced technology increasingly going into vehicles by introducing solutions designed to streamline the administration of these diagnostics, scanning, and calibration tasks and to increase transparency and trust throughout this process.

Since 2017 diagnostic scanning and calibration.

Rapidly become a common activity and collision repair.

Everyone involved in resolving a collision.

Has an interest in a quick quality repair and the CCC platform is helping the entire ecosystem navigate the advanced technology increasingly going into vehicles by introducing solutions designed to streamline the administration of these diagnostic scanning and calibration tasks.

To increase transparency and trust throughout this process.

Githesh Ramamurthy: This multi-sided benefit helped increase the total volume of validated scans moving through CCC diagnostics by 80% year over year in 2023. The great thing about a multi-sided network, of course, is that its value to each participant grows as more participants join. And while we continue to add participants in our existing category, we also plan to add new business categories to enable additional innovation across the CCC network. Our ability to do this is enhanced by the investments we have made in our IT infrastructure and AI capabilities, and is a key enabler of growth and enhanced value to customers in 2024 and beyond. My third and final point is that we have invested significantly in CCC's growth capacity and capabilities while continuing to expand margin. During 2023, we invested across multiple dimensions of the business to enable the necessary components to scale our growth into a multi-billion dollar revenue company. I will highlight three of these components.

This multi sided benefit helped to increase the total volume of validated scans moving through CCC diagnostics by 80% year over year in 2023.

The great thing about our multi sided network of course is that it's value to each participants grows as more participants joined the network.

And while we continue to add participants cannot existing categories. We also plan to add new business categories to enable.

Additional innovation across the CTC network.

Our ability to do this is enhanced by the investments we have made in our it infrastructure and AI capabilities.

And as a key enabler of growth and enhanced value to customers in 2024 and beyond.

My third and final point is that we have invested significantly in ccc's growth capacity and capabilities, while continuing to expand margins.

During 2023, we invested across multiple dimensions of the business to enable the necessary components to scale our growth into a multibillion dollar revenue company.

I will highlight three of these components over.

Over the last two years, we have increased our product development capacity by over 30%.

Githesh Ramamurthy: Over the last two years, we have increased our product development capacity by over 30%, and I've also significantly expanded our product design, product management, AI, and data science team. This has resulted in an accelerated pipeline of new product introductions. In dollar terms, R&D spend increased to approximately $150 million in 2023, excluding stock-based compensation. We completed the transition of tens of thousands of servers from our private cloud data centers to public cloud. This infrastructure provides the rapid scalability and redundancy needed to support our increasing new product velocity and position CCC for continued growth. One critical benefit we have seen already is the elastic compute capacity for AI inference and deployment. We no longer need to be in the business of buying and installing GPUs after doing that for a decade.

And I have also significantly expanded our product design product management.

AI and data science teams.

This has resulted in an accelerated pipeline of new product introductions.

In dollar terms R&D spend increased to approximately $150 million in 2023, excluding stock based compensation.

In 2023.

We completed the transition of tens of thousands of servers from our private cloud data centers to public clouds.

This infrastructure provides a rapid scalability and redundancy needed to support our increasing new product velocity and position CCC for continued growth.

One critical benefit we have seen already.

Elastic compute capacity for AI inference and deployment.

We no longer need to be in the business.

Buying and installing gpus after doing that for a decade.

The third component.

Is that during 2023, we also continued to add and train new leaders and associates and our market facing functions.

This has resulted in us working even more closely with our customers to understand their evolving needs and test new solutions.

We believe that our position as our customers' partner of choice for innovation.

Githesh Ramamurthy: The Third Component is that during 2023, we will also continue to add and train new leaders and associates in our market facing teams. This has resulted in us working even more closely with our customers to understand their evolving needs and test new solutions. We believe that our position as our customers' partner of choice for innovation is reflected in our 99% GDR for the year, as well as our industry-leading net promoter score, which improved from 82 to 83 in 2020. We believe these investments help position CCC for our next leg of growth. And importantly, we were able to make these critical investments while delivering significant year-over-year margin expansion in 2023. We continue to execute on our strategic plan and mature as a public company. Two and a half years after going public, we have made significant progress in broadening our shareholder base and increasing the liquidity of our shares. Following the secondary offerings in November and January.

As reflected in our 99% GDR for the year as well as our industry, leading net promoter score, which improved from 82 to 83 in 2023.

We believe these investments help position CCC for our next leg of growth.

And importantly, we were able to make these critical investments.

While delivering significant year over year margin expansion in 2023.

We continue to execute on our strategic plan and mature as a public company.

Two and a half years after going public we.

We have made significant progress in broadening our shareholder base and increasing the liquidity of our shares.

Following the secondary offerings in November and January.

Our free float has increased by almost 60 million shares.

To about 50% of shares outstanding.

A significant improvement in liquidity in just four months.

In addition were able to improve our balance sheet efficiency to the targeted repurchase of 5% of shares outstanding using approximately $328 million in cash.

Let me conclude by saying that we are incredibly proud.

Of what our team accomplished in 2023.

We are excited about what we have planned for 2024 and remained confident in our ability to continue to deliver on our strategic and financial objectives.

Githesh Ramamurthy: Our free flow has increased by almost 60 million shares to about 50% of shares outstanding, a significant improvement in liquidity in just four months. In addition, we're able to improve our balance sheet efficiency to the targeted repurchase of 5% of shares outstanding, using approximately $328 million in cash. Let me conclude by saying that we are incredibly proud of what our team accomplished in 2023.

I'll now turn the call over to Brian who will walk you through our results.

Thanks catastrophe.

Natasha highlighted by investing in ccc's growth capacity and capabilities delivering innovation to meet our clients accelerating demand for AI enabled solutions and growing the multi sided network, we are driving positive momentum across the business and reinforcing our confidence in our long.

Term growth outlook.

We are pleased with our top and bottom line performance, which reflects a balance between investment and growth initiatives and margin discipline.

Now as we turn to the numbers I'd like to review, our fourth quarter and fiscal year 2023 results and then provide guidance for the first quarter and full year 2024.

Brian Herb: We are excited about what we have planned for 2024 and remain confident in our ability to continue to deliver on our strategic and financial objectives. I will now turn the call over to Brian, who will walk you through our results. [inaudible] As Gitesh highlighted, by investing in CCC's growth capacity and capabilities, delivering innovation to meet our clients' accelerating demand for AI-enabled solutions, and growing the Multi-Sided Network, we are driving positive momentum across the business and reinforcing our confidence in our long-term growth. We are pleased with our top and bottom line performance, which reflects a balance between investment and growth initiatives and margin. Now, as we turn to the numbers, I'd like to review our fourth quarter and fiscal year 2023 results and then provide guidance for the first quarter and full year 2025. Total revenue for the fourth quarter was $228.6 million, up 12% from the prior year period.

Total revenue for the fourth quarter with $228 6 million up 12% from the prior year period total revenue for fiscal year 2023 was $866 4 million up 11% from 2022.

Approximately nine points of our revenue growth in Q4 was driven by cross sell upsell and adoptions of our solutions across our client base, including repair shop package upgrades continued adoption of our digital solutions and the ongoing strength in casualty and parts about one point of the nine point.

Came from one time items in the year end true up revenue above contractual commitments on our subscription contracts.

An incremental three points of growth came from new logos, mostly in our repair facilities and part suppliers I also want to highlight that we sell about one point of growth contribution in Q4 from our emerging solutions, mainly diagnostics and estimate STP.

Now turning to our key metrics software gross dollar retention, our GDR captures the amount of revenue retained from our client base compared to the prior year period in.

In Q4, 2023, our GDR with 99%.

Which was up modestly from 98% last quarter.

Please note that since the first quarter 2020, our GDR has been between 98%, 99% and is rounded up or down primarily driven by repair shop industry churn.

Brian Herb: Total revenue for fiscal year 2023 was $866.4 million, up 11% from 2020. Approximately nine points of our revenue growth in Q4 were driven by cross-sell, up-sell, and adoptions of our solutions across our clients, including repair shop package upgrades, continued adoption of our digital solution, and the ongoing strength in Casualty. About one point of the nine points came from one-time items and year-end true-up revenue above contractual commitments on our subscription. An incremental three points of growth came from new logos, mostly in our repair facilities and parts suppliers. I also want to highlight that we saw about one point of growth contribution in Q4 from our emerging solutions, mainly diagnostics and estimation. 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.

We believe our software GDR reflects the value, we provide and the significant benefits that accrue to our customers from participating in the broader CCC network.

Our strong GDR as a core tenant of our predictable 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 and our auto physical damage client base in Q4, 2023, R&D hour was 108% up from 107%.

The last couple of quarters.

Now I'll review the income statement in more detail as a reminder, unless otherwise noted all metrics are non-GAAP. We've provided a reconciliation of GAAP to non-GAAP in our press release.

Adjusted gross profit in the quarter was $181 5 million.

Adjusted gross profit margin was 79%.

Up from 78% last quarter and 77% in the fourth quarter of 2022 with stronger year over year. Adjusted gross profit margin primarily reflects operating leverage on incremental revenue overall, we feel good about the operating leverage and the scalability of the business model and our ability.

To deliver against our long term adjusted gross profit margin target of 80% in.

Brian Herb: In Q4 2023, our GDR was 99%, which was up modestly from 98% last quarter. Please note that since the first quarter of 2020, our GDR has been between 98 and 99% and has rounded up or down, primarily driven by the repair shop industry. We believe our software GDR reflects the value we provide and the significant benefits that accrue to our customers from participating in the broader CCC network. Our strong GDR is a core tenet of our predictable and resilient revenue. Software Net Dollar Retention, or NDR, captures the amount of cross-sell and up-sell from our existing customers compared to the prior year period, as well as volume movements in our auto-physical damage business.

In terms of expenses adjusted operating expense in Q4, 2023 was $98 million up 7% year over year. This was mainly driven by investments in our customer facing functions as well as higher it related cost.

In the quarter, we also benefited from a $3 million one time insurance claim reimbursement.

Adjusted EBITDA for the quarter was $100 1 million up 25% year over year with an adjusted EBITDA margin of 44%.

Now turning to the balance sheet and cash flow, we ended the quarter with $195 million in cash and cash equivalents and $784 million of debt at the end of the quarter. Our net leverage was one seven times adjusted EBITDA.

Free cash flow in Q4 was $75 1 million compared to $72 4 million in the prior year period.

Free cash flow for the full year 2023 was $195 million up 28% year over year, our free cash flow margin in 2023 was 23% compared to 19% in 2022, Unlevered free cash flow in Q4 was $85 million or approximately 85.

Brian Herb: In Q4 2023, our NDR was 108%, up from 107% in the last couple quarters. Now I'll review the income statement in more detail. As a reminder, unless otherwise noted, all metrics are non-GAAP.

Percentage of our adjusted EBITDA for the full year 2023, Unlevered free cash flow was $235 million, 67% of our adjusted EBITDA on a reported basis.

Our level of free cash flow can vary quarter to quarter. We expect it will continue to average out in the mid 60% range of our adjusted EBITDA.

Brian Herb: We've provided a reconciliation of GAAP to non-GAAP in our press release. Adjusted gross profit in the quarter was $181.5 million, and adjusted gross profit margin was 79%, up from 78% last quarter and 77% in the fourth quarter of 2022. The stronger year over year adjusted gross profit margin primarily reflects operating leverage on incremental revenue. Overall, we feel good about the operating leverage and the scalability of the business model, and our ability to deliver against our long-term adjusted gross profit margin target of 80%. In terms of expenses, Adjusted Operating Expenses in Q4 2023 were $90.8 million, up 7% year-over-year.

I would now like to finish with guidance beginning in Q1 2024, we expect total revenue of $224 $5 million to $226 million, which represents 10% growth year over year.

We expect adjusted EBITDA of 95 to 92 million, 41% adjusted EBITDA margin at the midpoint in Q1 for the full year 2024, we expect revenue of $942 million to $915 million, which represents 9% to 10% year over year growth.

We expect adjusted EBITDA of 387 to 395 million, which represents 41% adjusted EBITDA margin at the midpoint.

So three points to keep in mind as you think about our first quarter and full year guidance for 2020 for the first point is that we saw broad based strength across insurance in Q4 of last year, including revenue from our above contractual commitments. This can vary quarter to quarter. As a result, we expect total Q1 <unk>.

Brian Herb: This was mainly driven by investments in our customer facing operations, as well as higher IT-related costs. In the quarter, we also benefited from a $3 million one-time insurance claim reimbursement. Adjusted EBITDA for the quarter was $100.1 million, up 25% year-over-year, with an adjusted EBITDA margin of 44%. Now turning to the balance sheet and cash flow, we ended the quarter with $195 million in cash and cash equivalents and $784 million of debt. At the end of the quarter, our net leverage was 1.7 times adjusted evidence. Free cash flow in Q4 was $75.1 million, compared to $72.4 million in the prior year period.

2020 for revenue growth to be up 10% year over year, but this is down sequentially in absolute dollars.

Second point is that the emerging solutions, which contributed about one point of growth in 2023, and we expect that level of contribution from the upsell and cross sell of these emerging solutions to be a larger contributor of growth in 2024. As these solutions continued to scale. The third point is that as in prior year.

Years, we experienced some seasonality in our year over year adjusted EBITDA margin with the second half levels being above the first half we expect 2024 to be consistent with this pattern with the first half margins being constrained by the reset of employee related expenses and the <unk>.

Most of our industry conference or.

Along with the absence of the 3 million dollar insurance benefit that we recognized in Q4 of last year.

We therefore see the starting point of our year over year adjusted EBITDA margin expansion.

Against our full year 2023 margin of 41% overall, the strong trends, we're seeing in renewables.

Relationship expansions and the new solution adoption and reinforces our confidence in the underlying strength of the business. The combination of our durable business model advanced AI capabilities, the interconnected network and the broad solutions have puts us in a unique position to help our customers in the P&C insurance.

Brian Herb: Free cash flow for the full year of 2023 was $195 million, up 28% year-over-year. Our free cash flow margin in 2023 was 23%, compared to 19% in 2021. Unlevered free cash flow in Q4 was $85 million, or approximately 85% of our adjusted EBITDA. For the full year of 2023, unlevered free cash flow was $235 million.

<unk> reduced cycle times and administration costs, while improving their consumers experience throughout the claim process.

The need for Digitization across the P&C insurance economy continues to accelerate and CCC is well positioned to drive durable growth in both revenue and profitability in the near and long term.

Brian Herb: 67% of our adjusted EBITDA on a reported basis. While our level of free cash flow can vary quarter to quarter, we expect it will continue to average out in the mid 60% range of our adjusted EBITDA. I'd now like to finish with guidance beginning in Q1 2024. We expect total revenue of $224.5 to $226 million, which represents 10% growth year over year. We expect adjusted EBITDA of $90.5 to $92 million.

We are confident in our ability to deliver against our long term target of 7% to 10% organic revenue growth and adjusted EBITDA margins expanding in the mid Forty's, we've delivered over 1000 basis points of margin expansion in the last four years, while investing in innovation to support our growth ambitions and we will continue to buy.

<unk> investments and margin expansion going forward.

As we continue to execute on our strategic priorities. We believe we will generate significant value for both our customers and our shareholders with that operator, we are ready to take questions. Thank you.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question and one follow up one moment for questions.

Brian Herb: 41% adjusted EBITDA margin at the midpoint in Q1. For the full year 2024, we expect revenue of 942 to 915 million, which represents 9 to 10% year-over-year growth. We expect adjusted EBITDA of 387 to 395 million, which represents 41% adjusted EBITDA margin at the midpoint.

Our first question comes from Alexia <unk> with Jpmorgan you May proceed.

Thank you Hank you pass.

Hi, Brian Congratulations on great results.

Brian I've noticed.

The record high gross margin that you delivered in the fourth quarter was 29% I was wondering if there were any nonrecurring.

Revenue items that boosted gross margin, perhaps maybe similar to what you had in the fourth quarter of 'twenty one.

Hey, Alexia, yes, we did.

Brian Herb: So three points to keep in mind as you think about our first quarter and full year guidance for 2020. The first point is that we saw broad-based strength across insurance in Q4 last year, including revenue from our above contractual. This can vary quarter to quarter. As a result, we expect total Q1 2024 revenue growth to be up 10% year over year, but this is down sequentially in absolute dollars. The second point is that emerging solutions, which contributed about one point of growth in 2023, and we expect that level of contribution from the upsell and cross sell of these emerging solutions to be a larger contributor of growth in 2024 as these solutions continue to scale. The third point is that, as in prior years, we experienced some seasonality in our year over year adjusted EBITDA margin, with the second half levels being higher than the first.

The point to highlight on the stronger gross profit.

We do have the year end true ups that happen each year. So that is volumes exceed the contractual commitments of our clients and so we recognize that excess volume, they're not material to the total revenue position, but they do largely come together in Q4.

That drives stronger gross profit.

You can see that in the number that said, we're happy with the progress we're seeing on gross profit across the year and Thats really being driven off the operating leverage within the business.

Okay perfect.

And <unk>.

Yes.

I was wondering if.

You consider expanding your.

Consistent beyond the existing components, obviously you don't.

Dominate the P&C insurance amount of motive.

High market share in repair facility.

This easy.

Very strong presence in the supplier side.

Have you considered expanding into for example, automotive dealerships and does that make sense in terms of a logical step in your evolution.

Hey, Alex.

We know one of the things that we're doing right now.

As with all of these new product introductions, we feel we've got a number of runways.

With our existing customers and the ecosystem, we built still a lot of room for expansion with the dealers.

Can you bring additional capabilities with OEM partners and as you know we have a pretty deep presence with insurers repairs.

And the like and then we've also as we look at expanding further with solutions like first look.

That would connect to broader parts of the ecosystem.

And that is something we're continuously looking at to expand into the network.

But they will be more along the lines of the product introductions that help connect and drive those expansions.

Okay. Thank you for your attention.

Alright, Thank you Alexia.

Thank you.

Operator: The relationship expansions and the new solution adoption reinforce our confidence in the underlying strength of the business. The combination of our durable business model, advanced AI capabilities, the interconnected network, and the broad solutions puts us in a unique position to help our customers in the P&C insurance economy reduce cycle times and administration costs while improving their customers' experience throughout the claim process. The need for digitization across the PNC insurance economy continues to accelerate, and CCC is well positioned to drive durable growth in both revenue and profitability in the near and long term. We are confident in our ability to deliver against our long-term target of 7-10% organic revenue growth and adjusted EBITDA margins expanding in the mid-40s. We've delivered over a thousand basis points of margin expansion in the last four years while investing in innovation to support our growth ambitions, and we will continue to balance investments in margin expansion going forward.

One moment for questions.

Our next question comes from some odd Samana with Jefferies. You May proceed.

Hi, Good evening. Thanks for taking my question, it's great to see that.

Close to 2023.

Maybe first on the AI solutions I know you guys have offered.

Enabled products for several years.

But it sounds like maybe the interest level usage and scope of what your customers are willing to think about when it comes to AI.

Spanning so I know you just mentioned and several additional products like impact dynamics and fresh look, but how should we think about maybe the wound product velocity given that there is increased interest from customers and.

The patent Commoditization pretty clear there for you guys as well.

Hey.

Yes, just a very quick update on what we're seeing is that.

The trend that I pointed out on the call that.

Our customers are seeing.

As turnover increases and the skill level lets people retire at the same time it takes something like subrogation as an example.

Operator: As we continue to execute on our strategic priorities, we believe we will generate significant value for both our customers and our shareholders. With that, operator, we are ready to take questions. Thank you. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Might get a 200 page document that somebody has to analyze.

And with the AI capabilities that we built that are very specific to those documents and what we see.

We can literally reduce the time to extract information help them make the right decisions from literally hours to a matter of seconds or minutes. So when people actually start using it testing these capabilities.

Alexei Gogolev: Please limit yourself to one question and one follow-up. One moment for questions. Our first question comes from Alexei Gogolev with J.P. Morgan. You may proceed. Thank you. Hi Githesh. Hi Brian.

And these have to be also built in the existing workflows that people are already using so we are seeing greater and greater acceptance across the board.

Brian Herb: Congratulations on great results. Brian, I noticed the record high gross margin that you delivered in the fourth quarter of 79%. I was wondering if there were any non-recurring revenue items that boosted gross margin, perhaps maybe similar to what you had in the fourth quarter of 2021. Yeah, hey, Alexei.

But like every other solutions, we deliver they also have to deliver ROI. So I'd give you.

What we've also done is with the visual AI capabilities.

Very very deep IP that we have built.

Along the photo AI capabilities, we have expanded to a range of solutions both for the insurers the repairs like jumpstart repair cost predictor impact dynamics first look and then several as well, but the appetite.

Customers continue to be more and more interested.

Great and then if I could ask maybe Brian a follow up question I was just.

Starting point for guidance last year.

Slightly more modest.

Starting at 9% to 10 this year I guess any change to either the way you thought about the guidance buildup.

Primarily due to the expected contribution of the newer products being more or is there anything else that we can think about and how that starting point guidance, we've built up.

Yes sure.

Yes. So we are in the long term range of seven to 10. The guide as we start the year is at the upper end of that range as you suggest nine to 10.

Githesh Ramamurthy: And Githesh, I was wondering if you considered expanding your ecosystem beyond the existing components. Obviously, you dominate the PNC insurance in the automotive sector, you have a high market share in repair facilities, and a very strong presence on the supplier side. Have you considered expanding into, for example, automotive dealerships? And does that make sense in terms of a logical step in your resolution? Hey, Alexei.

I would just say, we're looking at the momentum and the progress we're seeing across the business both with the established solutions and the emerging solutions. So we did 11 points of growth in the second half, we did 12 points of growth.

In Q4, although one point of that growth within the quarter was really linked to these true ups, which are a bit.

Githesh Ramamurthy: We know one of the things that we are doing right now is with all of these new product introductions. We feel we've got a number of runways. With our existing customers and the ecosystem we built, there is still a lot of room for expansion with the dealers, and we will continue to bring additional capabilities with OEM partners. And, as you know, we have a pretty deep presence with insurers, repairers, and the like. And then we've also, as we look at expanding further with solutions like First Look, that will connect to broader parts of the ecosystem. And that is something we're continuously looking at to expand across the network. But they will be more along the lines of the product introductions that help connect and drive those expansions. Thank you. All right, thank you.

Exceptional in the quarter. So it's really the velocity and the progress across the solution set that gives us confidence both for the Q1 guide at 10% and then the full year position.

Great. Thanks again guys.

Thank you. Thank you.

One moment for questions.

Our next question comes from Gabriela Borges with Goldman Sachs. You May proceed.

Hi, This is Kelly Valencia on for Gabriela first one for me is the CTC.

You need to invest but you always have just ramping group of emerging products that we're able to kind of start and support growth.

You talk about now having kind of a lot of shots on goals with those products, but just longer term how do you think about the limit.

How much customers are willing to pay a single vendor and kind of where you sit relative to other.

Operator: Thank you. One moment for questions. Our next question comes from Samad Samana on Jeffrey's He May Proceed. Hi, good evening.

Then that insurers versus just other vendors.

Samad Saleem Samana: Thanks for taking my questions. Great to see the strong close to 2023. Githesh, maybe first on the AI solutions.

Hey, Kelly Hey.

First let me give you a quick historical perspective, having been here for a long time right. Most of the products that we deliver revenue from today almost all of the revenue we reported last year $806 to $6 million I remember most of those revenue lines being at at or close to zero.

Samad Saleem Samana: I know you guys have offered AI-enabled products for several years, but it sounds like maybe the interest level, usage, and scope of what your customers are willing to think about when it comes to AI are expanding. So I know you just mentioned several additional products, like Impact Dynamics, in the first look, but how should we think about maybe the new product velocity, given that there's increased interest from customers, and is the path to monetization pretty clear there for you guys as well? Hey, yeah, yeah, just a very quick update on what we're seeing is that, you know, the trend that I pointed out on the call that our customers are seeing a drop, you know, as turnover increases and the skill level as people retire. At the same time, take something like subrogation as an example. You might get a 200-page document that somebody has to analyze. And with the AI capabilities that we've built that are very specific to those documents and what we see.

At some point or the other.

So that long history has taught us that as long as we can deliver.

Very high ROI to our customers on the additional solutions that we deliver and it solves problems in a very unique sort of way.

Integrated into their existing workflows quick to deploy easy to use supported with incredible service and analytics.

I think that Formula has actually worked very well for us.

And we have the benefit of actually when we build these new solutions.

We are blessed with some fantastic customers will push us really hard in terms of what they need and what they would like us to develop so many of these solutions are actually built and working very closely with customers.

Githesh Ramamurthy: We can literally reduce the time to extract information and help them make the right decisions from literally hours to a matter of seconds or minutes. So when people actually start using it, they will test these capabilities. And these also have to be built into the existing workflows that people are already using. So we are seeing greater and greater acceptance across the board. But like every other solution we deliver, they also have to deliver ROI. So I'd give you, you know, with the visual AI capabilities with very, very deep IP that we have built along with the photo AI capabilities, we have expanded to a range of solutions, both for the insurers and the repairers, like Jumpstart, repair to cost predictor, impact dynamics, first look, and then in several as well.

So that's what gives us confidence in that we can continue to grow and build.

That makes a ton of fun. Thank you and then just a follow up from me.

See the true ups that you have been score Q, causing customers to expand their contracts for the next year when it seems like.

Maybe volume going through.

Sure.

Yes, theres some mix elements in and Kelly.

But yes, I mean, we look at the true ups at the end of the day the clients want to get as close as they can to the pen.

To minimize the true ups, where there is volatility they'd prefer to project kind of in a more even linear way.

So when the contracts get said it really is trying to set it at the closest level, though where they expect to go.

But we still have that natural true up that happens each year.

Githesh Ramamurthy: But the appetite, you know, customers continue to be more and more interested. Great. And if I could ask maybe Brian a follow-up question, I was just looking at the starting point for guidance last year, which was slightly more modest. Starting at nine to 10 this year, I guess, any change to the way you thought about the guidance build-up?

There is there is volatility in the volume, especially around customer mix.

So it is a part of the business as I said before it's not a material part when you look at the overall revenue and how much the <unk>, it's very immaterial. It just comes together at year end.

Thank you and congrats.

Thank you.

Brian Herb: And is it primarily due to the expected contribution of the newer products being more? Or is there anything else that we can think about in how that starting point guidance, Yeah, sure. Um, yeah, so we are in the long-term range of seven to 10. The guide is that we start the years at the upper end of that range, as you suggest nine to 10.

Thank you.

One moment for questions.

Our next question comes from Kirk <unk> with <unk>.

Evercore ISI you May proceed.

Yeah, Hi, guys. This is actually Peter Berkeley on for Kirk I'll Echo my congrats on a strong quarter.

So just one for me I sort of want to stick on the topic of the emerging solutions, but specifically estimate STP. So I believe last quarter, you talked about sort of a strategic.

Brian Herb: I would just say, you know, we're looking at the momentum and the progress we're seeing across the business, both with the established solutions and the emerging solutions. So we did 11 points of growth in the second half, and we did 12 points of growth in Q4, although one point of that growth within the quarter was really linked to these true ups, which are a bit exceptional in the quarter. So it's really the velocity and the progress across the solution set that gives us confidence both for the Q1 guide at 10% and then the full year position. Great.

We have made where it started to expand the Tam for that estimate STP expanding it beyond just that 30% mobile self serve channel and expanding it into their repair facility Npls industrial channels. So I'm just curious in light of that sort of.

The evolution of the product.

Just discuss the broader pace of adoption you are seeing for estimate SDP.

Today, and maybe how that sort of plays them to what seems like a higher implied guide for next year in terms of contribution from the emerging solution.

Sure.

First and foremost.

What we see is originally we started focusing estimate STP on only the mobile channel where the consumer is processing the claim in a self service manner, using a mobile phone and our AI was starting right at that point, that's roughly 30%.

Samad Saleem Samana: Thanks again, guys. Thank you. One moment for questions. Our next question comes from Gabriela Borges with Goldman Sachs. You may proceed. Hi, this is Callie Valenti on behalf of Gabriela.

Gabriela Borges: The first one for me is, you know, CCC has continued to invest so that you always have this accelerating group of emerging products that are able to kind of start and support growth. You talk about now having kind of a lot of shots and goals with those products, but just longer term, how do you think about the limits of how much customers are willing to pay a single vendor and kind of where you sit relative to other vendors versus just other vendors? Hey Kelly.

And we had been working.

Hard to continue to Rev. The models improve the models.

There we know what we said is that.

Even in Q4 without added significantly more insurers.

So more and more carriers are coming on stream carriers, who are using it for a very small fraction are rolling out to more states on an aggregate basis, it's still relatively low percentages. Even today and then we have literally a few weeks of experience now having put.

Githesh Ramamurthy: Hey, first, let me give you a quick historical perspective. I have been here for a long time, right? Most of the products that we deliver revenue from today, you know, almost all the revenue we reported last year, $866 million. I remember most of those revenue lines being close to zero at some point or the other. So, that long history has taught us that as long as we can deliver very high ROI to our customers on the additional solutions that we deliver, and it solves problems in a very unique sort of way, integrated into their existing workflows, quick to deploy, easy to use, supported with incredible service and analytics. I think that formula has actually worked very well for us.

It out in the repair facility market, maybe a couple of months or so maybe a month.

And we've already seen several thousand repair facilities by the way just as a reminder, repair facilities or roughly 45%. The direct repair network in terms of how claims are run through our managed and there we have seen.

Anecdotally volumes are small, but instead of taking 30 minutes to write an initial estimate we can see that jumpstart for example rights of estimate in about two minutes. It still requires some tweaking and making sure. It's in final final form, but we are seeing.

A significant amount of excitement.

First.

Major change in how the repair facilities.

Githesh Ramamurthy: And we have the benefit of actually, when we build these new solutions. We are blessed with some fantastic customers who push us really hard in terms of what they need and what they would like us to develop. So many of these solutions are actually built in, working very closely with customers. So that's what gives us confidence that we can continue to grow and build. That makes a ton of sense. Thank you. And then just follow up for me. Do you see the true ups that you have in 4Q causing customers to expand their contracts for the next next year when it seems like maybe volumes are going through or higher? Yeah, there are some mixed elements in it, Kelly.

Work and writing an estimate for a vehicle.

So so we are we feel very good about the technology, we feel very good about the revs that we have made the improvements we're seeing.

And in fact, we've now expanded that to first look which is a newer solution.

That can take photos from literally any channel whether its.

Tow truck or a salvage and actually informed more pieces of the process.

So we so bottom line is we feel very good.

And Peter the second part of your question you asked about the contribution from emerging solutions. So in 'twenty three it was one point of the total growth percent.

We do expect that to step up.

Brian Herb: But yeah, I mean, at the end of the day, clients want to get as close as they can to the pin to minimize the true ops. Where there's volatility, they prefer to budget kind of in a more even, linear way. So when the contracts get set, it really is trying to set them at the closest level to where they expect to go. But we still have that natural true-up that happens each year, just because there is volatility in the volume, especially around customer mix. So it is a part of the business, but as I said before, it's not a material part.

This year.

And then continue to scale going forward. So over time within our long term target, we talked about 40% of that growth coming from emerging solution. So from the one point. We saw last year that continues to will continue to scale and move towards those long term targets.

Very helpful. Thank you both.

Thank you.

One moment for questions.

Our next question comes from Tyler Radke with Citi. You May proceed.

Hi, This is Peter on the line for Tyler Radke.

I just had one question here regards to renewals just looking back at the last few days.

Insurance premiums and repair costs for motor vehicles, that's trended like at the top of the lists.

Brian Herb: When you look at the overall revenue and how much the true operating expenses are, it's very immaterial. It just comes together at year end. Thank you and congrats. Thank you. One moment for questions. Our next question comes from Kirk Materne with Evercore ISI. You may proceed. Yeah, hi guys. This is actually Peter Burkly on for Kirk.

Just curious what approach you guys have had in terms with the negotiating contract renewals with your customers would you say theres been more leverage on your end in terms of negotiating the price of the contract.

No I would not say that there is any material.

Difference in how we have worked with customers I mean, we've worked with our customers for decades.

Kirk Materne: I'll echo my congratulations on a strong quarter. So just one for me, I sort of want to stick on the topic of emerging solutions, but specifically STP. So I believe last quarter, you talked about sort of a strategic move you've made to expand the TAM for that estimate STP, expanding it beyond just that 30% mobile self-serve channel and expanding it into, you know, the repair facility and field adjuster channels. So I'm just curious, in light of that sort of, you know, continued evolution of the product, if you could just discuss the broader pace of an option you're seeing for Sure. Peter, first and foremost... You know, originally, we started focusing Estimated STP on only the mobile channel, where the consumer is processing the claim in a self-service manner using a mobile phone. And our AI was starting right at that point; that's roughly 30%.

And the Formula is pretty straightforward.

We add new solutions each of them is an ROI. These are mission critical tools for our customers and these are long standing relationships. So I would not say that there's been any material change one way or the other yes, I would just add I mean, we do continue to look at the package offerings that we take to our customers and we consider.

Catastrophe, the ROI and ensure we're balancing the benefit that customers get from the solution and also make sure that we're getting our fair value. Obviously inflation has been felt across the industry and we consider that as we think about the packages and the pricing within those packages.

Okay. Thanks, and then just as a follow up too.

You said, a cross sell and upsell is going to be like a larger contribution to growth and to 324 is there any way to quantify how much of that would be from established solution versus emerging solutions.

Well, we've talked about in the long term guide is that we.

We talked about seven to 10 organic growth in the long term guide, we say 20% of that will come from new logos and then we say the balance comes from cross sell and up sell and then what we've done is we've broken that in half and said half of that will come from the established solutions that have been in market for several years and the other half will come from these emerging.

Githesh Ramamurthy: And we have been working, you know, hard to continue to revise the models, improve the models. And there, what we said is that even in Q4, we now added significantly more insurers. And so more and more carriers are coming on stream. Carriers who are using it for a very small fraction are rolling out to more states. On an aggregate basis, it's still relatively low percentages, even today.

<unk>. So that's how we've broken it out over the long term.

We'll continue to progress towards those longer term metrics.

Thank you.

One moment for questions.

Our next question comes from.

Korea with Barclays You May proceed.

Okay, Great Hey, guys. Thanks for taking my questions here nicely done.

Githesh Ramamurthy: And then we have literally a few weeks of experience now having put it out in the repair facility market, maybe a couple of months or so, maybe a month. And we've already seen several thousand repair facilities. By the way, just as a reminder, repair facilities are roughly 45% of the direct repair network in terms of how claims are run through and managed. And there, we have seen, anecdotally, volumes are small, but instead of taking 30 minutes to write an initial estimate, we can see that JumpStart, for example, writes an estimate in about two minutes. It still requires some tweaking and making sure it's in its final, final form, but we are seeing a significant amount of excitement. It's the first.

Yes.

Brian maybe I'll start with you.

Great to hear that emerging is going to be a bigger driver of growth in 2024.

Maybe just to make sure that the question is asked as that becomes a bigger part of the business are there any things that we should keep in mind from just a margin perspective like are the margins on the emerging products significantly different than.

What I'll call the core part of the portfolio.

Yes, good question.

So over time, when the emerging solutions get to scale and make sure. They will have similar margin characteristics of the established solutions we have today.

So they will have very high drop through.

We don't see really differences I think right now is theyre just starting to scale. There is margin dilution just as they get rolled out and the support cost.

Brian Herb: A major change in how repair facilities, you know, work and write an estimate for a vehicle. And, you know, so we are, we feel very good about the technology. We feel very good about the revisions that we have made, the improvements we're seeing. And, in fact, we've now expanded that to First Look, which is a newer solution that can take photos from literally any channel, whether it's a tow truck or a salvage, and actually inform more pieces of the process. So, the bottom line is, we feel very good. And Peter, in the second part of your question, you asked about the contribution from emerging solutions. So in 23, it was one point of the total growth percent.

We start to amortize them as they come into market.

And so the cost will be ahead of some of their revenue until they get to scale, but as I said once they get to scale and start to mature the margin characteristics will look like the established solutions we have today.

Got it got it that makes sense.

Maybe for you maybe just to switch gears a little bit I was wondering if you could talk about the casualty business, a little bit and sort of how you view that going into 2024, there's such an enviable enviable position in Apd among the top 20 carriers in particular, what sort of pipeline do you sort of see for more cross.

Cell with casualty into that top 20 base does it makes sense.

Brian Herb: We do expect that to step up this year and then continue to scale going forward. So over time, within our long-term target, we talked about 40% of the growth coming from emerging solutions. So from the one point we saw last year, that will continue to scale and move towards those long-term targets. Very helpful. Thank you both.

No just give you a quick.

Even in Q4, we saw the addition of a number of casualty customers. We added a number of casualty customers in.

In 2023.

With that said the number of our Apd customers that are using our casualty solution is still on it's still relatively small. So we have continued to expand our casualty solutions. We're seeing good uptake from customers and then whats also we also.

Tyler Maverick Radke: One moment for questions. Our next question comes from Tyler Radke with Citi. You may proceed. Hi, this is Peter on the line for Tyler Radke. I just had one question here in regards to renewals, just looking back at the last few, Insurance Premiums and Repair Costs for Motor Vehicles. That's trending pretty at the top of the list.

C is industry, leading first of its kind solutions like impact dynamics, which takes the physics of an accident the treaty physics of an accident and imputes.

Potential for injury.

And provides early warning to reach claims may need more attention and alike. So those are also being well received again that is something that does not exist in the market at all so both in terms of traditional casualty solutions as well as completely new.

Githesh Ramamurthy: I'm just curious what approach you guys have had in terms of negotiating contract renewals with your customers. Would you say there's been more leverage on your end in terms of negotiating the price of the contract? You know, I would not say that there is any material difference in how we work with customers. I mean, we've worked with our customers for decades, and our formula is pretty straightforward. As we add new solutions, each of them with an ROI, these are mission-critical tools for our customers, and these are long-standing relationships. So I would not say that there's been any material change one way or the other. Yeah, I would just add.

State of the art casualty solutions with AI. So we're continuing to see good adoption.

So feel good about the long term prospects now.

Absolutely thanks, guys.

Thanks.

Okay.

Thank you.

One moment for questions.

Our next question comes from Dylan Becker with William Blair You May proceed.

Hey, guys really nice job here, maybe maybe too.

Forget cash just from a high level thinking about the hardening auto market.

What the implications of that means for insurance carriers, how they think about kind of factors in complexity impacting their business and maybe how that incentivize his or her unlock some capacity to drive incremental investment around.

Githesh Ramamurthy: I mean, we do continue to look at the package offerings that we take to our customers, and we consider, as Githesh said, the ROI and ensure we're balancing the benefits the customers get from the solution and also making sure that we're getting our fair value. Obviously, inflation has been felt across the industry, and we consider that as we think about the packages and the pricing within those packages. Thanks.

And kind of data driven initiatives or opportunities.

Yes, I think.

What we have seen.

Got it.

Is that the.

Shock to the system that we saw in 2022 in terms of increased cost sell parts and labor.

Brian Herb: And then, just as a follow-up, you said a cross-sell upsell is going to be a larger contribution to growth in fiscal year 24. Is there any way to quantify how much of that would be from established solutions versus emerging solutions? What we've talked about in the long-term guide is that, you know, we talk about seven to 10 organic growth in the long-term guide. We say 20% of that will come from new logos, and then we say that balance comes from cross-sell and upsell.

Michael time increases so that drove significant increases more so than anything we've seen over the last decade. So while those increases took place in 'twenty two and then what we saw towards late 'twenty. Three is those increases are a little more moderate than the extreme that we.

So in 'twenty two 'twenty three.

And so customers have now looked at that capability.

And also.

Our customers tend to view things over a long horizon. They don't yes, while there are some challenges in the short term our customers also see.

Brian Herb: And then what we've done is we've broken that in half and said half of that will come from the established solutions that have been in the market for several years, and the other half will come from these emerging solutions. So that's how we've broken it out over the long term. And we'll continue to progress towards those longer-term metrics. Thank you.

The next three years and five years and we've had many conversations with many of our customers, who see fundamentally new ways of configuring their operations using new technology and different technology to change the process to do things very differently.

Saket Kalia: One moment for questions. Our next question comes from Saket Kalia with Barclays. You may proceed. Okay, great. Hey guys, thanks for taking my questions here and nicely done. Brian, maybe I'll start with you.

So.

I do think there's a stronger appetite that we see from our customers to adopt change processes, especially when you see significant improvements.

Okay got it that makes it kind of sense and then maybe that's a good segue to thinking about the impact of dynamics offering and maybe how carriers are thinking about the convergence.

Saket Kalia: Great to hear that emerging is going to be a bigger driver of growth in 2024. Maybe just to make sure that the question is asked, as that becomes a bigger part of the business, are there any things that we should keep in mind from just a margin perspective? Like, are the margins on the emerging products significantly different from what I'll call the core part of the portfolio? Yeah, good question, Saket.

Those apd and casualty workflows by connecting more of that early stage data, maybe there's no solutions operated independently in the past, but are you seeing kind of more of that convergence is coming into play in those lines kind of blurring, obviously, creating some longer term opportunity as you think about that cross seller.

Brian Herb: So over time, when the emerging solutions get to scale and are mature, they will have similar margin characteristics of the established solutions we have today. So they will have very high drop through. We don't really see any differences.

Attach as well thank you.

Well over the long term the answer is yes in the short term impact dynamics can work for any customer regardless of what traditional casualty solutions are using.

Brian Herb: I think right now that they're just starting to scale. There is margin dilution just as they get rolled out in the support cost. We start to amortize them as they come into the market.

So I would say, there's probably a quicker ramp something like impact dynamics.

Brian Herb: And so the cost will be ahead of some of the revenue until they get to scale. But as I said, once they get to scale and start to mature, the margin characteristics will look like the established solutions we have today. Got it. Got it. That makes sense. Githesh, maybe for you, maybe just to switch gears a little bit.

And the linkages are increasing that the more of these components that can work together to let you manage the entire ecosystem of our claim from end to end from loss from the first notice of loss all the way through settlement and Thats really where I think we differentiate.

Githesh Ramamurthy: I was wondering if we could talk about the casualty business a little bit and sort of how you view that going into 2024. You know, there's such an enviable position in APD among the top 20 carriers, in particular. What sort of pipeline do you sort of see for more cross-sell with casualty into that top 20 base? Does that make sense?

Ourselves and that we are in those workflows, we have applied artificial intelligence very heavily and will continue to build out the ecosystem.

So that's kind of how we see it playing out.

Very helpful. Thanks, guys Congrats again.

Thank you one moment for questions.

Githesh Ramamurthy: Yep. Now, I'll just give you a quick update. You know, even in Q4, we saw the addition of a number of casualty customers. We had a number of casualty customers in, you know, 2023. With that said, the number of our APD customers that are using our casualty solution is still relatively small.

Our next question comes from Josh Baer with Morgan Stanley You May proceed.

Alright, thanks for the question.

In the quarter was was higher than typical even after adjusting for the true ups. So just wondering.

Whereas the results in line with your expectations like with this adjustment or anything specific to call out that positively surprised you versus your internal plan.

Githesh Ramamurthy: So, we have continued to expand our casualty solutions, and we're seeing good uptake from customers. And then, what we also see is industry-leading, first-of-its-kind solutions like impact dynamics, which takes the physics of an accident, the 3D physics of an accident, and imputes, you know, potential for injury and provides early warning of which claims may need more attention and the like. So, those are also being well-received. Again, that is something that does not exist in the market at all.

Yeah, Hey, Josh it's Brian Yes, So we were really happy with the performance in the quarter, So 12 points and even when you normalize the year end true ups and the one off revenue that was a point. So it was 11 and as you said it came in a lot stronger than we had put out in the guidance I'd say it was it was broad.

<unk> based.

So we saw strength across many of our Apd clients.

We saw strength in casualty, we saw strength in parts.

Githesh Ramamurthy: So, both in terms of traditional casualty solutions as well as completely new, state-of-the-art casualty solutions with AI. So, we're continuing to see good adoption and feel good about the long-term process. Yeah, absolutely. Thanks, guys. Thanks, Saket.

Very good asps, so on the repair facility up sells and upgrades into packages. So theres nothing really one area to highlight as kind of the driver for the over performance. It was very broad based set of results really across the portfolio. So we're pleased with the performance overall.

Dylan Tyler Becker: Thank you. One moment for questions. Our next question comes from Dylan Becker with William Blair. You may proceed.

Great and one on the repair facility opportunity, obviously, a lot more that you can sell back into your base, but wanted to ask about the penetration as far as new repair facilities.

Dylan Tyler Becker: Hey guys, really nice job here. Maybe maybe two for Gitesh, just from a high level thinking about the hardening auto market, kind of what the implications of that mean for insurance carriers, how they think about the kind of factors and complexity impacting their business, and maybe how that incentivizes or, or unlocks some capacity to drive incremental investment around digital and kind of data-driven initiatives or opportunities. Yeah, I think, you know, what we have seen is that the shock to the system that we saw in 2022, in terms of increased costs of parts and labor, and cycle time increases, so that drove significant increases, more so than anything we've seen over the last decade. So while those increases took place in 22, and then what we saw towards late 23, those increases are a little more moderate than the extreme that we saw in 22 and 23.

Like where are they coming from what's the profile of that repair Phil facility are they are those new customers spending like more or less than average.

Just wondering for some more context there.

<unk> thousand per year is still a good number to think about going forward.

Yes, a couple of things so first.

When I look back in 2010, we probably added about 20000 repair facilities.

We're now click.

Clicking towards pretty close to 30000 repair facilities.

And then when you look at how many of our repair facilities used one or two solutions right, even as far back even a few years back we only had a repair facilities using two or more of our solutions about half of them today I would say just three four years later, we see that.

Githesh Ramamurthy: And so customers have now looked at that capability. And also, our customers tend to view things over a long horizon. Yes, while there are some challenges in the short term, our customers also see, you know, over the next three years and five years, and we've had many conversations with many of our customers who see fundamentally new ways of configuring their operations using new technology and different technology to change the process and do things very differently. And so, you know, I do think there's a stronger appetite that we see from our customers to adopt change processes, especially when you see, Okay, I got it. That makes it kind of make sense.

Half hour repair facilities are using four or more of our solutions. So there's a large installed base and as we continue to deliver new solutions that really help them with their business as they as they have capacity issues and trying to look for more efficiencies. So thats really one.

Very important path back to your the second part of your question, we do feel good about continuing to add repair facilities at the rate at which.

The rate at which you saw.

Our estimate is probably roughly 40000 repair facilities and the industry overall.

And.

We still think there's ways to go to continue to grow.

Githesh Ramamurthy: And then maybe that's a good segue to thinking about the impact dynamics offering and maybe how carriers are thinking about the convergence of those APD and casualty workflows by connecting more of that early stage data. I don't know, maybe those solutions operated independently in the past, but are you seeing kind of more of that convergence coming into play in those lines, kind of blurring, obviously creating some longer-term opportunity as you think about that cross-seller attach as well? Thank you. Well, over the long term, the answer is yes. In the short term, impact dynamics can work for any customer regardless of what traditional casualty solutions they're using. So I would say there is probably a quicker ramp for something like impact dynamics.

Okay. Thank you very much.

Thank you.

One moment for questions.

Our next question comes from Mike Funk with Bank of America, You May proceed.

Hi, Brian This is Matt <unk> on for Mike.

I had a quick one on STM and STP.

Are you seeing a material improvement and estimate STP functionality as volumes ramp with customers and you continue to fine tune those models and if so can you help us quantify it and then secondarily is this led to a sort of flywheel with adoption. Thanks.

Yes, I would say initially we had restricted it way back to private passenger vehicles to be added pickup trucks than we did restricted it to front pay backs them back impacts now we will open it up for <unk> impacts.

Githesh Ramamurthy: And the linkages are increasing that more of these components that can work together to let you manage the entire ecosystem of a claim, from end to end, from loss from the first notice of loss all the way through settlement. And that's really where I think we differentiate ourselves in that we are in those workflows, we have applied artificial intelligence very heavily, and we've continued to build out the ecosystem. So that's kind of how we see it playing out. Very helpful. Thanks, guys. Congratulations again.

The extended across all models. The accuracy is significantly better were making more parts predictions more subtle very subtle damage versus obvious damage. So the feedback loop, we have with really the scale of the feedback loop and the size of the data.

The set we have with both photos coming in repairs and estimates flowing through is really allowed us to improve quality substantially and thats.

Helped customers continue to expand to more and more states and as well as from a reference standpoint, they've been great references to other customers continuing to expand so so we just see that adoption continuing to happen.

Joshua Phillip Baer: Thank you. One moment for questions. Our next question comes from Josh Baer with Morgan Stanley. You may proceed.

Joshua Phillip Baer: Great, thanks for the question. The upside in the quarter was higher than typical, even after adjusting for the true ups. So I was just wondering, were the results in line with your expectations, like with this adjustment, or anything specific to call out that positively surprised you versus your internal plan? Yeah, hey, Josh, it's Brian.

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In terms of.

Yes, so I mean as far as the it's Brian here as far as the.

The claim volume we are still even though as catastrophe, we're making progress with.

New clients on and the expansion of those existing clients.

Bill at low low rates. So if you think about kind of the total claims that are coming through we are still in the single digit percentages.

Brian Herb: Yeah, so we were really happy with the performance in the quarter. So, you know, 12 points. And even when you normalize the year-end true ups and the one-off revenue, that was a point. So it was 11.

But as we sit here today, we feel really good about the opportunity that we've talked about.

The medium long term as we think about the.

The overall opportunity for <unk> TP.

This level the runways that we have across all of different solution sets is that even if you look at how we delivered Q4 much of that growth came from products and solutions that have been around for a long time. So we see all of these new solutions. We are developing to have fairly long runways in terms of <unk>.

Brian Herb: And, as you said, it came in a lot stronger than we had put out in the guidance. I'd say it was broad-based. So we saw strength across many of our APD clients. We saw strength in casualties. We saw strength in parts. Very good ASG, so on the repair facility, upsells, and upgrades into packages. So there's really nothing really one area to highlight as kind of the driver for the overperformance. It was a very broad-based set of results, really across the portfolio. So we were pleased with the performance overall. Great

<unk>.

Super helpful. Thank you.

Thanks.

Thank you one moment for questions.

Our next question comes from Chris Moore with CJS Securities You May proceed.

Hi, This is will go down for Chris Moore, Congrats on a great year.

Free cash flow margin has increased from 19, 4% in 'twenty two to 'twenty two 5% in 2023 and based on your adjusted EBITDA guidance. It seems to be heading quickly into the mid twenties range can you give us any more color on how to think about this metric in 2024 and beyond.

Tyler Maverick Radke: And one on the repair facility opportunity, obviously a lot more that you can sell back into your base, but I wanted to ask about the penetration as far as new repair facilities are concerned, like where are they coming from? What's the profile of that repair facility? Are those new customers spending more or less than average? Just wondering for some more context there and if like a thousand per year is still a good number to think about going forward. Yeah, a couple of things.

Yeah. Good question, Yes, you are thinking about it the right way.

We're generating strong free cash flow.

We've seen it progress from 19%, 23% last year when you do the math that you just did and you look at the EBITDA and our Unlevered free cash flow guidance that we've given out which is roughly in the mid sixties of unlevered free cash flow to EBITDA.

Githesh Ramamurthy: So first, you know, when I look back in 2010, we probably had about 20,000 repair facilities. We're now clicking pretty close to 30,000 repair facilities. And then when you look at how many of our repair facilities used one or two solutions, right, even as far back as a few years ago, we only had repair facilities using two or more of our solutions, about half of them. Today, I would say, just three, four years later, we see that half of our repair facilities are using four or more of our solutions. So there's a large installed base, and as we continue to deliver new solutions that really help So that's really one very important path.

You get to the mid 20, so youre doing the math right. We're certainly just seen.

As the revenue scales in the strong free cash flows that this will continue to grow and so we feel really good on that performance and the opportunity in front of us with that.

Alright, Thats all I had thank you very much.

Thank you. Thank you.

One moment for questions.

Our next question comes from Shlomo Rosenbaum with Stifel. You May proceed.

Hey, Dan This is Adam Parrington for Shlomo could you talk a little bit about how payments adoption is progressing I believe last quarter. You mentioned, an adoption is tracking a little bit slower than subrogation that estimate STP.

Given the higher than expected complexity around the build out of the specific customer use cases are those build out is complete now and just kind of just general thoughts on how payments are trending.

Githesh Ramamurthy: Back to the second part of your question, we do feel good about continuing to add repair facilities at the rate at which you know, at the rate at which you saw, our estimate is there are probably roughly 40,000 repair facilities in the industry overall, and we still think there is a ways to go to continue to grow. Thank you very much.

Trending thanks.

Yes, I would just say that it is slower than the other products that youre seeing this is why we have a mix of a broad set of portfolio of solutions, we have because the adoption rates will vary.

But at the very fundamental level, what we are seeing in the work we're doing with customers is that many of the problems. We saw with payments in the claims process have not been solved.

Michael J. Funk: Thank you. One moment for questions. Our next question comes from Mike Funk with Bank of America. You may proceed. Hi, Gitesh, and Brian, this is Matt Bullock on behalf of Mike Funk.

So the problems and the complexities of their our product has improved the breadth of what we've built is improved and it do.

Githesh Ramamurthy: I had a quick one on estimate STP. Are you seeing a material improvement in estimate STP functionality as volumes have ramped up with customers and you continue to fine-tune those models? And if so, can you help us quantify it? And then, secondarily, does this lead to a sort of flywheel with adoption? Yeah, I would say, you know, initially, we restricted it way back to private passenger vehicles; we added pickup trucks, then we restricted it to front impacts and back impacts.

Do we just think it will take a little longer.

Okay. Thanks.

Thank you.

I'd now like to turn the call back over to <unk>.

Raymond Murphy for any closing remarks.

Hey, I just wanted to take the opportunity to thank everybody for your.

Your interest in CCC also would like to take the opportunity to thank the broader CCC team for incredible delivery in two.

2023, and our customers for their trust and the confidence they have in us as we go forward.

Githesh Ramamurthy: Now we, you know, we've opened it up for side impacts. We've extended it across all models, and the accuracy is significantly better. We're making more parts predictions, more subtle, very subtle damage versus, you know, obvious damage. So the feedback loop we have with the scale of the feedback loop and the size of the data set we have, with both photos coming in and repairs and estimates flowing through, has really allowed us to improve quality substantially. And that's helped customers continue to expand to more and more states and, as well as, from a reference standpoint, have been great references to other customers continuing to expand. So we just see that adoption continuing to happen. And in terms of, Yeah, so I mean, as far as the, it's Brian here, as far as the, claim volume, we are still, even though, as Gitesh said, we're making progress with new clients and the expansion of those existing clients. We're still at low, low rates.

And we remain very excited about the opportunities.

In front of Us and again, thank you all for joining and we look forward to giving you updates as we go forward.

Thank you for your participation you may now disconnect.

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Githesh Ramamurthy: So if you think about kind of the total claims that are coming through, we're still in the single digit percentages. But as we sit here today, we feel really good about the opportunity that we've talked about in the medium and long term as we think about, you know, the overall opportunity for SMSTP. And this will have a lot to do with the runways that we have across all of our different solution sets. Even if you look at how we delivered Q4, much of that growth came from products and solutions that have been around for a long time. So we see all of these new solutions we're developing to have fairly long runways in terms of growth. Super helpful.

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Githesh Ramamurthy: One moment for questions. Our next question comes from Chris Moore with CJS Securities. You may proceed. Hi, this is Will Gilday on behalf of Chris Moore.

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Christopher Paul Moore: Congratulations on a great year. Free cash flow margin increased from 19.4% in 22 to 22.5% in 2023. And based on your JustDB.guidance, it seems to be heading quickly into the mid-20s range. Can you give us any more color on how to think about this metric in 2024 and beyond? Yeah, good question. Yeah, you're thinking about the right way.

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Brian Herb: I mean, we're generating strong free cash flow. We saw it progress from 19% to 23% last year. When you do the math that you just did, and you look at EBITDA and our unlevered free cash flow guidance that we've given out, which is roughly in the mid-60s of unlevered free cash flow to EBITDA, you get to the mid-20s. So you did the math right.

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Brian Herb: We're certainly just seeing that as the revenue scales and the strong free cash flow grows, this will continue to grow. And so we feel really good about that performance and the opportunity in front of us with it. All right, that's all I have.

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Brian Herb: Thank you very much. Thank you. Thank you. One moment per question.

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Shlomo H. Rosenbaum: Our next question comes from Shlomo Rosenbaum with Stifel; you may proceed. Hi, this is Adam Barrington on behalf of Shlomo. Could you talk a little bit about how payments adoption is progressing? I believe last quarter you mentioned adoption is tracking a little bit slower than subrogation and estimate STP, given the higher than expected complexity around the build out of specific customer use cases. Are those build outs complete now?

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Githesh Ramamurthy: And just kind of general thoughts on how payments are trending? Thanks. Yeah, I would just say that it is slower than the other products that you're seeing.

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Githesh Ramamurthy: This is why we have a mix of a broad set of solutions in our portfolio because the adoption rates will vary. But at a very fundamental level, what we are seeing in the work we're doing with customers is that many of the problems we saw with payments and the claims process have not been solved. And so the problems and the complexities are there, our product has improved, the breadth of what we've built has improved, and we just think it'll take a little longer. Thank you. I would now like to turn the call back over to Githesh Ramamurthy for a closing remark. Hey, I just want to take the opportunity to thank everybody for your interest in CCC. I also would like to take the opportunity to thank the broader CCC team for incredible delivery in 2023 and our customers for their trust and the confidence they have in us as we go forward. And we remain very excited about the opportunities in front of us. And again, thank you all for joining us.

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Githesh Ramamurthy: And we look forward to giving you updates as we go forward. Thank you for your participation. You may now disconnect. Thanks for watching!

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Operator: ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thank you, operator. Good afternoon, and thank you all for joining us today to review CCC's fourth 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 Githesh 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.

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Operator: These risks are discussed in the earnings releases available on our investor relations website and under the heading risk factors in our 2023 annual report on Form 10-K filed today with the SEC. Further, these comments and the Q&A that follows are copyrighted by CCC Intelligence Solutions Holdings, Inc. Any recording, retransmission, or reproduction or other use of the saying for profit or otherwise without prior consent of CCC is prohibited and a violation of United States copyright and other laws.

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Githesh Ramamurthy: For the fourth quarter of 2023, CCC's total revenue was $229 million, up 12% year-over-year and ahead of our guidance. Adjusted EBITDA for the fourth quarter was $100 million, up 25% year-over-year, and adjusted EBITDA margin was 44%, both also ahead of our guidance. Revenue for the full year 2023 was $866 million, up 11% year over year, and well above the high end of our initial 2023 guidance. Adjusted EBITDA for the full year 2023 was $353 million, and adjusted EBITDA margin was $41 million, also well above the high end of our initial guidance. We believe our strong performance is a result of growing interest in advanced digital solutions across PNC Insurance and the trust our customers place in us to Over the past four years, two and a half as a publicly traded company.

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Githesh Ramamurthy: We have grown our revenue by over 50%, almost entirely organically, from $570 million in 2019 to $886 million in 2023, with a Q4 run rate of over $900 million. At the same time, we have grown our adjusted EBITDA by more than 100%, from $170 million in 2019, a 30% margin, to $353 million, a 41% margin in 2023. Q4 was the first time we delivered $100 million in adjusted EBITDA in a quarter.

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Githesh Ramamurthy: Today I want to focus on what we have done to position CCC for continued growth as we head into 2021. The first is delivering innovation to meet our clients' accelerating demand for AI-enabled services. The second is continuing to grow our multi-sided network. And third is investing in CCC's growth capacity and capability, while continuing to expand margin. My first topic is the innovation we are delivering to meet our clients' accelerating demand for AI.

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Good day, and thank you for standing by welcome to the CCC intelligent solutions fourth quarter fiscal 2023 earnings 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 this session. Please press star one one on your telephone and <unk>.

Githesh Ramamurthy: I've noticed a significant change in my conversations with clients over the past few years. While claims and repair cost inflation continue to be a concern, clients are increasingly turning their attention to the accelerating retirement of their workers. They expect between one third and one half of their most experienced workers to retire before the end of the decade. What this means for our clients across the PNC Insurance economy is that they are facing the loss of decades of institutional knowledge, which will most likely result in a smaller, less experienced, and higher turnover workforce. Making the situation even more worrisome is that this labor shortage is taking place simultaneously with rapidly rising. As a result, our customers need help closing the skill gap with new and existing work quickly. These and other challenges are driving an increasing interest and adoption of AI-driven solutions across our client base. In 2023, CCC processed the highest number of auto claims in the company's 43-year history.

Your name to be announced to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Bill Warmington, Vice President of Investor Relations.

Joining me on the call our catastrophe Murthy, Ccc's, chairman and CEO and Brian <unk> CFO of <unk>.

We're 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.

These risks are discussed in the earnings release is available on our Investor Relations website and under the heading risk factors in our 2023 annual report on Form 10-K filed today with the SEC.

Githesh Ramamurthy: On a cumulative basis, over 19 million unique claims since 2018 have now been processed using a CCC AI-enabled solution. And we have doubled the number of insurers using our AI-based Estimate STP solution over the last year. AI took a large step forward across our portfolio in 2023, and we are well positioned for additional advancement in 2021. For insurers, 2023 saw growth in our AI-based computer vision technology, not just in greater estimated SDP usage, but in expanded input channels and usage. First, we extend our mobile AI from consumer self-service to the field adjuster channel.

Further these comments and the Q&A that follows are copyrighted today by CCC Intelligence solutions Holdings incorporated.

Any recording retransmission 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 can provide a transcript of portions of this call and we have approved the publishing of a transcript of this call by a third party, we take no risk.

Possibility for in accuracies that may appear in the transcripts.

Githesh Ramamurthy: And in Q4, we broadened that even further with the introduction of First, a solution designed to enable insurers to ingest and analyze photos from additional sources, including tow trucks, salvage providers, and more, so they can leverage AI more flexibly and comprehensively across the claims handling and appraisal process. We also introduced IMPACT Dynamics, which leverages AI computer vision capability to predict impact severity from vehicle damage photos, enabling earlier and more accurate triage of potential casualty claims based on insurer rules, among other applications. Significant investment in our AI-enabled subrogation solution has also generated strong momentum as we start 2025. Subrogation is the process of one insurer requesting payment from another insurer based on liability for a claim.

A reconciliation of GAAP to non-GAAP measures is available in our earnings release that is available on our Investor Relations website.

You.

And now I'll turn the call over to catastrophe.

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 performance to complete another record year in 2023.

For the fourth quarter of 2023, Ccc's total revenue was $229 million up 12% year over year and ahead of our guidance range.

Githesh Ramamurthy: Tens of billions of dollars in claims are subrogated each year in a highly manual, paper-based process, costing insurers over $2 billion per year in loss adjustment. Customers using our solution have seen significant improvements in subrogation recoveries and in the efficiency of their subrogation activity. And we added multiple new subrogation customers in Q4. For Repairers, 2023 saw the introduction of two new AI-based photos. The first was Repair Cost Predictor, which enables collision repairers to quickly provide a predicted repair cost range to consumers. The second was Mobile Jumpstart, which we launched in late Q4. Mobile jumpstart uses AI to dramatically reduce the time it takes an estimator to generate an initial estimate. And since its introduction, more than 3,000 repair facilities have already used the solution, with an average time to complete an initial estimate of less than two minutes, versus the traditional industry average of half an hour or more.

Adjusted EBITDA for the fourth quarter was $100 million.

25% year over year, and adjusted EBITDA margin was 44%. Both also ahead of our guidance range.

Revenue for the full year, 2023 was $866 million up 11% year over year and well above the high end of our initial 2023 guidance range.

Adjusted EBITDA for the full year 2023 was $353 million and adjusted EBITDA margin was 41%.

Also well above the high end of our initial guidance range.

We believe our strong performance is a result of growing interest in advanced digital solutions across the P&C insurance economy.

And the trust our customers place in us to deliver those innovations.

Over the past four years, two and a half as a publicly traded company.

We have grown our revenue by over 50% almost entirely organically.

Githesh Ramamurthy: These innovations are simply transformational for a capacity-constrained industry like coalition. At CCC, our goal is to enable the digitization of the entire auto claim supply chain, from first notice of loss all the way through subrogation. [inaudible] To digitize and automate ever more steps in the claims and repair process, eliminating waste, reducing cycle time, and improving satisfaction for our customers and theirs. We believe that the fusion of our industry-leading AI, deep multi-sided network, and scalable multi-tenant platform positions us as the partner of choice for our clients' digital transformation, allowing more and more of a claims lifecycle to be processed using CCC solutions over My second topic is the continued growth of our multi-sided network. In 2023, we expanded our network of customers by adding over 1,000 collision repairers and over 500 parts dealers, while expanding our relationships with several key automotive OEMs.

$570 million in 2000 $19 million to $886 million in 2023, with a Q4 run rate of over $900 million.

Over the same time, we have grown our adjusted EBITDA by more than 100%.

From $170 million in 2019% to 30% margin to $353 million or 41% margin in 2023.

Q4 was the first time, we delivered $100 million and adjusted.

Adjusted EBITDA in a quarter.

Today I want to focus on what we have done to position CCC for continued growth as we head into 2024.

The first is delivering innovation to meet our clients accelerating demand for AI enabled solutions.

The second is continuing to grow our multi sided network.

And third is investing in ccc's growth capacity and capabilities.

While continuing to expand margins.

My first topic is the innovation, we are delivering to meet our clients accelerating demand for AI solutions.

I've noticed a significant change in my conversation with clients over the past few months.

Githesh Ramamurthy: We are now approaching 30,000 repair facilities and 5,000 parts suppliers from the CCC network have renewed and expanded multiple insurer relationships, including a top 20 carrier that's scheduled to roll out a full suite of auto physical damage solutions in Q2 of 2024, as well as several new casualty insurers. We have also expanded our ecosystem, with leading technology and service providers who increasingly see the value of connecting to the broader CCC network. CCC Diagnostics is a good example of the power of the CCC network. Since 2017, diagnostics, scanning, and calibration have rapidly become a common activity in collision repair. Everyone involved in resolving a collision has an interest in a quick, quality repair, and the CCC platform is helping the entire ecosystem navigate the advanced technology increasingly going into vehicles by introducing solutions designed to streamline the administration of these diagnostics, scanning, and calibration tasks and to increase transparency and trust throughout this process.

While claims and repair cost inflation continues to be a concern.

Clients are increasingly turning their attention to the accelerating retirement of their workforces.

What we're hearing from customers is that they expect between one third and one half.

Of their most experienced workers to retire before the end of the decade.

This situation even more worrisome is that this labor shortage is taking place simultaneously with rapidly rising vehicle repair complexity.

As a result, our customers need help closing the skill gap with new and existing workers quickly.

These and other challenges are driving accelerating interest in adoption of AI driven solutions across our client base.

In 2023, CCC process, the highest number of auto claims and the companies 43 year history.

On accumulative basis over 19 million unique claims since 2018 have now been processed using ACC AI enabled solution.

And we have doubled the number of insurers using our AI based estimate STB solution over the last year.

I took a large step forward across our portfolio in 2023, and we are well positioned for additional advancement in 2024.

For insurers 2023 saw growth in our AI based computer vision technology, not just in greater estimate STP usage, but an expanded input channels and use cases first we extend our mobile AI from consumer self service to the field adjusters channel and.

In Q4, we broaden that even further with the introduction of first look a solution designed to enable insurers to ingest and analyzed photos from additional sources, including tow trucks salvage providers and more so they can leverage AI more flexibly and comprehensively.

<unk> across the claims handling and appraisal process.

We also introduced impact dynamics, which leverages AI computer vision capabilities to predict impact severity from vehicle damage photos, enabling earlier and more accurate triage a potential casualty claims based on ensure rules among other.

<unk>.

Significant investment in our AI enabled subrogation solution has also generated strong momentum as we start 2024.

Subrogation is the process of one insurer requesting payment from another insurer based on liability for a claim.

Tens of billions of dollars in claims are subrogate. It each year in a highly manual paper based process costing insurers over $2 billion per year and loss adjustment expense.

Customers using our solution have seen significant improvements in subrogation recoveries and in the efficiency of their subrogation activities.

And we added multiple new subrogation customers in Q4.

For repairs 2023 saw the introduction of two new AI based photo solutions the.

The first was repair cost predictor, which enables collision repairs to quickly provide a predicted repair cost range to consumers. The second was mobile jumpstart, which we launched in late Q4.

Mobile jumpstart uses AI to dramatically reduce the time it takes an estimate or to generate an initial estimate and since its introduction more than 3000 repair facilities have already used the solution.

Githesh Ramamurthy: The Third Component is that during 2023, we will also continue to add and train new leaders and associates in our market-facing teams. This has resulted in us working even more closely with our customers to understand their evolving needs and test new solutions. We believe that our position as our customers' partner of choice for innovation is reflected in our 99% GDR for the year, as well as our industry-leading net promoter score, which improved from 82 to 83 in 2020. We believe these investments help position CCC for our next leg of growth. And importantly, we were able to make these critical investments while delivering significant year-over-year margin expansion in 2023. We continue to execute on our strategic plan and mature as a public company.

With an average time to complete an initial estimate of less than two minutes versus the traditional industry average of half an hour or more.

These innovations are simply transformational for a capacity constrained industry like collision repair.

At CCC, our goal is to enable the digitization of the entire auto claims supply chain.

First notice of loss all the way through subrogation.

We believe that the fusion of our industry, leading AI deep multi site network and scalable multi tenant platform positions us as the partner of choice for our clients' digital transformation and for more and more of our claims lifecycle to be processed using.

CCC solutions over time by.

My second topic is the continued growth of our multi sided network in.

Githesh Ramamurthy: Two and a half years after going public, we have made significant progress in broadening our shareholder base and increasing the liquidity of our shares, following the secondary offerings in November and January. Our free flow has increased by almost 60 million shares to about 50% of shares outstanding, a significant improvement in liquidity in just four months. In addition, we're able to improve our balance sheet efficiency to the targeted repurchase of 5% of shares outstanding using approximately $328 million in cash. Let me conclude by saying that we are incredibly proud of what our team accomplished in 2023.

In 2023, we expanded our network of customers by adding over 1000 collision repairs and over 500 parts dealers, while expanding our relationships with several key automotive Oems.

We are now approaching 30000 repair facilities in 5000 parts suppliers from the CTC network.

We have also expanded our ecosystem with leading technology and service providers will increasingly see the value of connecting to the broader CCC network.

Githesh Ramamurthy: We are excited about what we have planned for 2024 and remain confident in our ability to continue to deliver on our strategic and financial objectives. I will now turn the call over to Brian, who will walk you through our results. As Gitesh highlighted, by investing in CCC's growth capacity and capabilities, delivering innovation to meet our clients' accelerating demand for AI-enabled solutions, and growing the Multi-Sided Network, we are driving positive momentum across the business and reinforcing our confidence in our long-term growth. We are pleased with our top and bottom line performance, which reflects a balance between investment and growth initiatives and margin. Now, as we turn to the numbers, I'd like to review our fourth quarter and fiscal year 2023 results and then provide guidance for the first quarter and full year of 2025. Total revenue for the fourth quarter was $228.6 million, up 12% from the prior year period.

CCC diagnostics is a good example of the power of the CCC network connection.

Since 2017 diagnostic scanning and calibration.

Have rapidly become a common activity and collision repair.

Everyone involved in resolving a collision.

<unk> has an interest in a quick quality repair and the CCC platform is helping the entire ecosystem navigate the advanced technology increasingly going into vehicles.

Introducing solutions designed to streamline the administration of these diagnostic scanning and calibration tasks and to increase transparency and trust throughout this process.

This multi sided benefit helped to increase the total volume of validated scans moving through CCC diagnostics by 80% year over year in 2023.

The great thing about our multi sided network of course is that it's value to each participants grows as more participants join the network.

And while we continue to add participants in our existing categories. We also plan to add new business categories.

Brian Herb: Total revenue for fiscal year 2023 was $866.4 million, up 11% from 2020. Approximately nine points of our revenue growth in Q4 were driven by cross-sell, up-sell, and adoptions of our solutions across our clients, including repair shop package upgrades, continued adoption of our digital solution, and the ongoing strength in Casualty Embrace. About 1 point of the 9 points came from one-time items and year-end true-up revenue above contractual on our subscription. An incremental 3 points of growth came from new logos, mostly in our repair facilities and parts suppliers. I also want to highlight that we saw about one point of growth contribution in Q4 from our emerging solutions, mainly diagnostics and estimation. 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.

To enable additional innovation across the CTC network.

Our ability to do this is enhanced by the investments we have made in our it infrastructure and AI capabilities.

And as a key enabler of growth and enhanced value to customers in 2024 and beyond.

My third and final point is that we have invested significantly in ccc's growth capacity and capabilities, while continuing to expand margins.

During 2023, we invested across multiple dimensions of the business to enable the necessary components to scale our growth into a multibillion dollar revenue company.

I will highlight three of these components over.

Over the last two years, we have increased our product development capacity by over 30%.

And I have also significantly expanded our product design product management, AI and data science teams.

This has resulted in an accelerated pipeline of new product introductions.

In dollar terms R&D spend increased to approximately $150 million in 2023, excluding stock based compensation.

In 2023.

We completed the transition of tens of thousands of servers from our private cloud data centers to public clouds.

This infrastructure provides the rapid scalability and redundancy needed to support our increasing new product velocity and position CCC for continued growth.

Brian Herb: In Q4 2023, our GDR was 99%, which was up modestly from 98% last quarter. Please note that since the first quarter of 2020, our GDR has been between 98 and 99% and is rounded up or down primarily driven by the repair shop industry. We believe our software GDR reflects the value we provide and the significant benefits that accrue to our customers from participating in the broader CCC network. Our strong GDR is a core tenet of our predictable and resilient revenue. Software Net Dollar Retention, or NDR, captures the amount of cross-sell and up-sell from our existing customers compared to the prior year period, as well as volume movements in our auto-physical damage business.

One critical benefit we have seen already is the elastic compute capacity for AI inference and deployment.

We no longer need to be in the business.

Buying and installing gpus after doing that for a decade.

The third component is that during 2023, we also continued to add and train new leaders and associates in our market facing functions.

This has resulted in us working even more closely with our customers to understand their evolving needs and test new solutions.

We believe that our position as our customers' partner of choice for innovation is reflected in our 99% GDR for the year as well as our industry, leading net promoter score, which improved from 82 to 83 in 2023.

Brian Herb: In Q4 2023, our NDR was 108, up from 107% the last couple quarters. Now I'll review the income statement in more detail. As a reminder, unless otherwise noted, all metrics are non-GAAP. We've provided a reconciliation of GAAP to non-GAAP in our press release. Adjusted gross profit in the quarter was $181.5 million.

We believe these investments help position CCC for our next leg of growth.

And importantly, we were able to make these critical investments.

While delivering significant year over year margin expansion in 2023.

We continue to execute on our strategic plan and mature as a public company.

Two and a half years after going public we have made significant progress in broadening our shareholder base and increasing the liquidity of our shares.

Brian Herb: Adjusted gross profit margin was 79%, up from 78% last quarter and 77% in the fourth quarter of 2022. The stronger year-over-year adjusted gross profit margin primarily reflects operating leverage on incremental revenue. Overall, we feel good about the operating leverage and the scalability of the business model and our ability to deliver against our long-term adjusted gross profit margin target of 80%. In terms of expenses, Adjusted Operating Expense in Q4 2023 was $90.8 million, up 7% year-over-year.

Following the secondary offerings in November and January.

Our free float has increased by almost 60 million shares.

To about 50% of shares outstanding a.

A significant improvement in liquidity in <unk>.

Just four months.

In addition, we were able to improve our balance sheet efficiency.

The targeted repurchase of 5% of shares outstanding using approximately $328 million in cash.

Let me conclude by saying that we are incredibly proud.

Of what our team accomplished in 2023.

We're excited about what we have planned for 2024 and remained confident in our ability to continue to deliver on our strategic and financial objectives. I will now turn the call over to Brian will walk you through our results.

Brian Herb: This was mainly driven by investment in our customer facing function, as well as higher IT related costs. In the quarter, we also benefited from a $3 million one-time insurance claim reimbursement. Adjusted EBITDA for the quarter was $100.1 million, up 25% year-over-year, with an adjusted EBITDA margin of 44%. Now turning to the balance sheet and cash flow, we ended the quarter with $195 million in cash and cash equivalents and $784 million of debt. At the end of the quarter, our net leverage was 1.7 times adjusted EBIT. Free cash flow in Q4 was $75.1 million, compared to $72.4 million in the prior year period.

Thanks catastrophe as <unk> highlighted by investing in ccc's growth capacity and capabilities delivering innovation to meet our clients accelerating demand for AI enabled solutions and growing the multi sided network, we are driving positive momentum across the business and reinforce.

And our confidence in our long term growth outlook. We are pleased with our top and bottom line performance, which reflects a balance between investment and growth initiatives and margin discipline.

Now as we turn to the numbers I would like to review, our fourth quarter and fiscal year 2023 results and then provide guidance for the first quarter and full year 2024.

Total revenue for the fourth quarter with $228 6 million up 12% from the prior year period total revenue for fiscal year 2023 was $866 4 million up 11% from 2022 <unk>.

Brian Herb: Free cash flow for the full year of 2023 was $195 million, up 28% year-over-year. Our free cash flow margin in 2023 was 23%, compared to 19% in 2022. Unlevered free cash flow in Q4 was $85 million, or approximately 85% of our adjusted EBITDA. For the full year of 2023, unlevered free cash flow was $235 million.

<unk> came from one time items and year end true up revenue above contractual commitments on our subscription contracts.

Brian Herb: 67% of our adjusted EBITDA on a reported basis. While our level of free cash flow can vary quarter to quarter, we expect it will continue to average out in the mid-60% range of our Adjusted EBITDA. I'd now like to finish with guidance beginning in Q1 2024. We expect total revenue of $224.5 to $226 million, which represents 10% growth year over year. We expect adjusted EBITDA of $90.5 to $92 million

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.

In Q4, 2023, our GDR with 99%, which was up modestly from 98% last quarter.

Brian Herb: 41% Adjusted EBITDA Margin at the Midpoint in Q1. For the full year 2024, we expect revenue of $942 to $950 million, which represents 9% to 10% year-over-year growth. We expect Adjusted EBITDA of $387 to $395 million, which represents 41% Adjusted EBITDA Margin at the Midpoint.

Please note that since the first quarter 2020, our GDR has been between 98%, 99% and is rounded up or down primarily driven by repair shop industry churn.

We believe our software GDR reflects the value, we provide and the significant benefits that accrue to our customers from participating in the broader CCC network.

Our strong GDR as a core tenant of our predictable and resilient revenue model.

Brian Herb: So three points to keep in mind as you think about our first quarter and full year guidance for 2020. The first point is that we saw broad-based strength across insurance in Q4 last year, including revenue from our above contractual. This can vary quarter to quarter. As a result, we expect total Q1 2024 revenue growth to be up 10% year over year, but this is down sequentially in absolute dollars. The second point is that emerging solutions, which contributed about one point of growth in 2023, and we expect that level of contribution from the upsell and cross-sell of these emerging solutions to be a larger contributor of growth in 2024 as these solutions continue to scale. The third point is that, as in prior years, we experienced some seasonality in our year-over-year adjusted EBITDA margin, with the second half levels being higher than the first.

The last couple of quarters.

Now I'll review the income statement in more detail as a reminder, unless otherwise noted all metrics are non-GAAP. We've provided a reconciliation of GAAP to non-GAAP in our press release.

<unk> gross profit in the quarter was $181 5 million.

Adjusted gross profit margin was 79%.

Up from 78% last quarter and 77% in the fourth quarter of 2022, the stronger year over year. Adjusted gross profit margin primarily reflects operating leverage on incremental revenue overall, we feel good about the operating leverage and the scalability of the business model and our ability.

To deliver against our long term adjusted gross profit margin target of 80% in.

In terms of expenses adjusted operating expense in Q4, 2023 was $90 8 million up 7% year over year. This was mainly driven by investments in our customer facing functions.

Brian Herb: We expect 2024 to be consistent with this pattern, with the first half margins being constrained by the reset of employee-related expenses and the cost of our industry, along with the absence of the $3 million insurance benefit that we recognized in Q4 of last year. We therefore see the starting point of our year-over-year adjusted EBITDA margin expansion against our full year 2023 margin of 41%. Overall, the strong trends we're seeing in renewables, relationship expansions, and the new solution adoption reinforce our confidence in the underlying strength of the business. The combination of our durable business model, advanced AI capabilities, the interconnected network, and the broad solutions puts us in a unique position to help our customers in the P&C insurance economy reduce cycle times and administration costs while improving their consumers' experience throughout the claim process. The need for digitization across the PNC insurance economy continues to accelerate, and CCC is well positioned to drive durable growth in both revenue and profitability in the near and long term.

As well as higher it related costs.

In the quarter, we also benefited from a $3 million one time insurance claim reimbursement.

Adjusted EBITDA for the quarter was $100 1 million up 25% year over year with an adjusted EBITDA margin of 44%.

Free cash flow in Q4 was $75 1 million compared to $72 4 million in the prior year period.

Cent of our adjusted EBITDA for the full year 2023, Unlevered free cash flow was $235 million, 67% of our adjusted EBITDA on a reported basis, while our level of free cash flow can vary quarter to quarter. We expect it will continue to average out in the mid 60% range.

<unk> of our adjusted EBITDA.

I would now like to finish with guidance beginning in Q1 2024, we expect total revenue of 224, 5% to 226 million, which represents 10% growth year over year, we expect adjusted EBITDA of 95 to 92 million 41%.

Brian Herb: We are confident in our ability to deliver against our long-term target of 7-10% organic revenue growth and adjusted EBITDA margins expanding in the mid-40s. We've delivered over 1,000 basis points of margin expansion in the last four years while investing in innovation to support our growth ambitions. And we will continue to balance investments in margin expansions going forward. As we continue to execute on our strategic priorities, we believe we will generate significant value for both our customers and our shareholders. With that, Operator, we are ready to take questions. Thank you. Thank you. As a reminder, to ask a question, please press Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Adjusted EBITDA margin at the midpoint in Q1 for the full year 2024, we expect revenue of $942 million to $915 million, which represents 9% to 10% year over year growth, we expect adjusted EBITDA of $387 million to $395 million, which represents.

41% adjusted EBITDA margin at the midpoint.

So three points to keep in mind as you think about our first quarter and full year guidance in 2024.

First point is that we saw broad based strength across insurance in Q4 of last year, including revenue from our above contractual commitments. This can vary quarter to quarter. As a result, we expect total Q1 2020 for revenue growth to be up 10% year over year, but this is down sequentially.

Operator: Please limit yourself to one question and one follow-up. One moment for questions. Our first question comes from Alexei Gogolev with J.P. Morgan. You may proceed. Thank you. Hi Githesh. Hi Brian.

<unk> in absolute dollars. The second point is that the emerging solutions, which contributed about one point of growth in 2023, and we expect that level of contribution from the upsell and cross sell of these emerging solutions to be a larger contributor of growth in 2024 as these solutions continued to scale the third.

Alexei Gogolev: Congratulations on great results. Brian, I noticed the record high gross margin that you delivered in the fourth quarter of 79%. I was wondering if there were any non-recurring revenue items that boosted gross margin, perhaps maybe similar to what you had in the fourth quarter of 2021. Yeah, hey, Alexei.

Is that as in prior years, we experienced some seasonality in our year over year adjusted EBITDA margin with the second half levels being above the first half we expect 2024 to be consistent with this pattern with the first half margins being constrained by the reset of employee.

<unk> related expenses and the cost of our industry conference.

Brian Herb: Um, yeah, the point to highlight on the stronger gross profit. We do have the year-end true-ups that happen each year, so volumes exceed the contractual commitments of our clients, and so we recognize that excess volume. They're not material to the total revenue position, but they do largely come together in Q4, and that drives a stronger gross profit, and you can see that in the numbers. That said, we're happy with the progress we're seeing on gross profit across the year, and that's really being driven by operating leverage within the business. Okay, perfect. And Githesh, I was wondering if you considered expanding your ecosystem beyond the existing components. Obviously, you dominate PNC insurance. In the automotive sector, you have a high market share and repair facilities. Unknown Attendee, a very strong presence on the supplier side. Have you considered expanding into, for example, automotive dealerships? And does that make sense in terms of a logical step in your evolution?

Along with the absence of the $3 million insurance benefit that we recognized in Q4 of last year.

We therefore see the starting point of our year over year adjusted EBITDA margin expansion.

Against our full year 2023 margin of 41% overall, the strong trends, we're seeing in renewables.

<unk> reduced cycle times and administration costs, while improving their consumers experience throughout the claim process.

The need for Digitization across the P&C insurance economy continues to accelerate and CCC is well positioned to drive durable growth in both revenue and profitability in the near and long term.

Githesh Ramamurthy: Hey Alexei, one of the things that we are doing right now is with all of these new product introductions. We feel we've got a number of runways. With our existing customers and the ecosystem we built, there is still a lot of room for expansion with the dealers, and we will continue to bring additional capabilities with OEM partners. And as you know, we have a pretty deep presence with insurers, repairers, and the like. And then we also, as we look at expanding further with solutions like First Look, that'll connect to broader parts of the ecosystem. And that is something we're continuously looking at to expand into the network, but it will be more along the lines of the product introductions that help connect and drive that expansion. Thank you. All right, thank you.

<unk> investments and margin expansion going forward.

Our first question comes from Alexia <unk> with Jpmorgan you May proceed.

Thank you Hank you pass.

Hi, Brian Congratulations on great results.

Brian I've noticed.

The record high gross margin that you delivered in the fourth quarter of 79% I was wondering if there were any non recurring.

Revenue items that boosted gross margin, perhaps may be similar to what you had in the fourth quarter of 'twenty one.

Yeah, Hey, Alexia, Yes, we did.

The point to highlight on the stronger gross profit.

Operator: Thank you. One moment for questions. Our next question comes from Samad Samana on Jeffrey's He May Proceed. Good evening.

We do have the year end true ups that happen each year. So that is volumes exceed their contractual commitments of our clients and so we recognize that excess volume, they're not material to the total revenue position, but they do largely come together in Q4.

Samad Saleem Samana: Thanks for taking my questions. Great to see the strong close to 2023. Githesh, maybe first on the AI solutions.

Samad Saleem Samana: I know you guys have offered AI-enabled products for several years, but it sounds like maybe the interest level, usage, and scope of what your customers are willing to think about when it comes to AI are expanding. So I know you just mentioned several additional products, like Impact Dynamics, in the first look, but how should we think about maybe the new product velocity given that there's increased interest from customers and is the path to monetization pretty clear there for you guys as well? Hey, yeah, yeah, just a very quick update on what we're seeing is that, you know, the trend that I pointed out on the call that, you know, our customers are seeing a drop in productivity as turnover increases and the skill level as people retire. At the same time, take something like subrogation as an example. You might get a 200-page document that somebody has to analyze, and with the AI capabilities that we've built that are We can literally reduce the time to extract information and help them make the right decisions from literally hours to a matter of seconds or minutes. So when people actually start using it, they will test these capabilities. And these also have to be built into the existing workflows that people are already using.

That drives a stronger gross profit.

You can see that in the number that said, we're happy with the progress we're seeing on gross profit across the year and Thats really being driven off the operating leverage within the business.

Okay perfect.

And.

Keith.

I was wondering if.

You consider expanding.

Ecosystem beyond the existing components, obviously you.

Dominate the P&C insurance in automotive yet.

High market share in repair facility.

On this EV.

Very strong presence on the supplier side.

Have you considered expanding into for example, automotive dealerships and does that make sense in terms of a logical step in your evolution.

Hey, Alex.

We know one of the things that we're doing right now.

As with all of these new product introductions, we feel we've got a number of runways.

With our existing customers and the ecosystem, we built still a lot of room for expansion with the dealers.

Can you bring additional capabilities with OEM partners and as you know we have a pretty deep presence with insurers repairs.

And the like and then we've also as we look at expanding further with solutions like first look.

That will connect to broader parts of the ecosystem.

And that is something we're continuously looking at to expand into the network.

But there will be more along the lines of the product introductions that help connect and drive those expansions.

Githesh Ramamurthy: So, we are seeing greater and greater acceptance across the board. But, like every other solution we deliver, they also have to deliver ROI. So I'd give you, you know, what we've also done with the visual AI capabilities, with very, very deep IP that we have built along with the photo AI capabilities, we have expanded to a range of solutions, both for the insurers and the repairers, like Jumpstart, Repair to Cost Predictor, Impact Dynamics, First Look, and then in Saburo as well. But the appetite, you know, customers continue to be more and more interested Great, and if I could ask maybe Brian a follow-up question. I was just looking at the starting point for guidance last year. It was slightly more modest. It's starting at nine to 10 this year.

Okay. Thank you guys.

Alright, Thank you Alexis.

Thank you.

One moment for questions.

Our next question comes from some odd Samana with Jefferies. You May proceed.

Hi, Good evening. Thanks for taking my question, it's great to see that.

The strong close to 2023.

Could you guys, maybe first on the AI solutions I know you guys have offered.

Enabled products for several years.

But it sounds like maybe the interest level usage and scope of what your customers are willing to think about when it comes to AI.

Brian Herb: I guess, any change to either the way you thought about the guidance buildup, and is it primarily due to the expected contribution of the newer products being more, or is there anything else that we could think about in how that starting point guidance works? Yeah, sure. Um, yeah, so we are in the long-term range of seven to 10. The guide is that we start the years at the upper end of that range, as you suggest nine to 10.

The path to modernization pretty clear there from you guys as well.

Hey.

Yes, just a very quick update on what we're seeing is that.

The trend that I pointed out on the call that the.

Our customers are seeing.

As turnover increases and the skill level as people retire at the same time it takes something like subrogation as an example.

Might get a 200 page document that somebody has to analyze.

And with the AI capabilities that we built that are very specific to those documents and what we see.

And these have to be also built in the existing workflows that people are already using so we are seeing greater and greater acceptance across the board.

But like every other solutions, we deliver they also have to deliver ROI. So I'd give you. So what we've also done is with the visual AI capabilities.

Gabriela Borges: Thank you. One moment for questions. Our next question comes from Gabriela Borges with Goldman Sachs. You may proceed. Hi, this is Callie Valenti on behalf of Gabriela.

Very very deep IP that we have built.

Along the photo AI capabilities, we have expanded to a range of solutions both for the insurers the repairs like jumpstart repair cost predictor impact dynamics first look and then several as well.

Githesh Ramamurthy: The first one for me is, you know, CCC has continued to invest so that you always have this accelerating group of emerging products that are able to kind of start and support growth. You talk about now having kind of a lot of shots and goals with those products, but just longer term, how do you think about the limits of how much customers are willing to pay a single vendor and kind of where you sit relative to other vendors versus just other vendors? Hey Kelly.

But the appetite.

Customers continue to be more and more interested.

Great and then if I could ask maybe Brian a follow up question I was just.

Starting point for guidance last year.

Slightly more modest.

Starting at 9% to 10 this year I guess any change to either the way you thought about the guidance buildup and primarily due to the expected contribution of the newer products being more is there anything else that we should think about and how that starting point guidance buildup.

Githesh Ramamurthy: Hey, first, let me give you a quick historical perspective. Having been here for a long time, right? Most of the products that we deliver revenue from today, you know, almost all the revenue we reported last year, $866 million. I remember most of those revenue lines being close to zero at some point or the other.

Yes sure.

Yes. So we are in the long term range of seven to 10. The guide as we start the year is at the upper end of that range as you suggest nine to 10.

Githesh Ramamurthy: So, that long history has taught us that as long as we can deliver very high ROI to our customers on the additional solutions that we deliver, and it solves problems in a very unique sort of way, integrated into their existing workflows, quick to deploy, easy to use, supported with incredible service and analytics, I think that formula has actually worked very well for us.

In Q4, although one point of that growth within the quarter was really linked to these true ups, which are a bit.

Exceptional in the quarter. So it's really the velocity and the progress across the solution set that gives us confidence both for the Q1 guide at 10% and then the full year position.

Great. Thanks again guys.

Thank you. Thank you.

One moment for questions.

Our next.

Comes from Gabriela Borges with Goldman Sachs. You May proceed.

Hi, This is Kelly Valencia on for Gabriela first.

One for me is the CTC.

<unk> to invest that you always have this ramping group of emerging products that are able to kind of start and support gross you talk about now having kind of a lot of shots on goals with those products, but just longer term how do you think about the limit.

How much customers are willing to pay a single vendor and kind of where you sit relative to other.

Brian Herb: But yeah, I mean, we look at the true operations. At the end of the day, the clients want to get as close as they can to the pin to minimize the true operations where there's volatility; they prefer to budget kind of in a more even, linear way. So when the contracts get set, it really is trying to set it at the closest level to where they expect to go. But we still have that natural true op that happens each year just because there is volatility in the volume, especially around customer mix. So it is a part of the business. As I said before, it's not a material part; when you look at the overall revenue and how much the true operations are, it's very immaterial. It just comes together at year end. Thank you and congratulations.

And that insurers versus just other vendors.

Hey, Kelly Hey.

First let me give you a quick historical perspective, having been here for a long time right. Most of the products that we deliver revenue from today almost all of the revenue we reported last year $866 million I remember most of those revenue lines being at at or close to zero.

At some point or the other.

So that long history has taught us that as long as we can deliver.

Very high ROI to our customers on the additional solutions that we deliver and it solves problems in a very unique sort of way.

Integrated into their existing workflows quick to deploy easy to use supported with incredible service and analytics.

I think that Formula has actually worked very well for us.

Brian Herb: Thank you. One moment for questions. Our next question comes from Kirk Materne with Evercore ISI. You may proceed. Yeah, guys. This is actually Peter Burkly on behalf of Kirk.

And we have the benefit of actually when we build these new solutions.

Kirk Materne: I'll echo my congratulations on a strong quarter. So just one for me, I sort of want to stick on the topic of emerging solutions, but specifically STP. So I believe last quarter, you talked about sort of a strategic move you've made to expand the TAM for that estimate STP, expanding it beyond just that 30% mobile self-serve channel and expanding it into, you know, the repair facility and field adjuster channels. So I'm just curious, in light of that sort of, you know, continued evolution of the product, if you could just discuss the broader pace of an option you're seeing for Sure. Peter, first and foremost, you know, what we see is that originally, we started focusing Estimated STP on only the mobile channel, where the consumer is processing the claim in a self-service manner using a mobile phone. And our AI was starting right at that point; that's roughly 30%.

So that's what gives us confidence in that we can continue to grow and build.

That makes a ton of fun. Thank you and then just a follow up for me.

See the true ups that you have been score Q, causing customers to expand their contracts for the next year when it seems like.

Volume going through already.

Sure.

Yes, theres some mix elements in and Kelly.

But yes, I mean, we look at the true ups I mean at the end of the day the clients want to get as close as they can to the pen.

To minimize the true ups, where there is volatility they'd prefer to budget kind of in a more even linear way.

So when the contracts get said it really is trying to set it at the closest level, though where they expect to go.

But we still have that natural true up that happens each year.

Just be there is there is volatility in the volume, especially around customer mix.

So it is a part of the business as I said before it's not a material part when you look at the overall revenue and how much the <unk>, it's very immaterial. It just comes together at year end.

Thank you and congrats.

Githesh Ramamurthy: And we've been working, you know, hard to continue to revise the models, improve the models. And there, we, you know, what we said is that, you know, even in Q4, we now added significantly more insurers. And so more and more carriers are coming on stream; carriers who are using it for a very small fraction are rolling out to more states. On an aggregate basis, it's still relatively low percentages, even today.

Thank you.

One moment for questions.

Our next question comes from Kirk <unk> with Evercore.

Evercore ISI you May proceed.

Yes, Hi, guys. This is actually Peter Berkeley on for Kirk Our Echo my congrats on a strong quarter. So just one for me I sort of want to stick on the topic of the.

Emerging solutions, but specifically estimate STP. So I believe last quarter, you talked about sort of a strategic move.

Githesh Ramamurthy: And then we have literally a few weeks of experience now having put it out in the repair facility market, maybe a couple of months or so, maybe a month. And we've already seen several thousand repair facilities. By the way, just as a reminder, repair facilities are roughly 45 percent of the direct repair network in terms of how claims are run through and managed. And there, we have seen, anecdotally, volumes are small, but instead of taking 30 minutes to write an initial estimate, we can see that JumpStart, for example, writes an estimate in about two minutes. It still requires some tweaking and making sure it's in its final, final form, but we are seeing a significant amount of excitement. It's the first.

Made we're starting to expand the Tam for that estimate STP expanding it beyond just that 30% mobile self serve channel and expanding it into their repair facility Npls industrial channels. So I'm just curious in light of that sort of continued evolution of the product maybe you could just.

Scott the broader pace of adoption you are seeing for estimate STP.

And maybe how that sort of plays them to what seems like a higher implied guide for next year in terms of contribution from their marketing slogan.

Sure Peter.

Peter first and foremost.

Githesh Ramamurthy: A major change in how repair facilities, you know, work and write an estimate for a vehicle. And, you know, so we are, we feel very good about the technology. We feel very good about the revisions that we have made, the improvements we're seeing. And, in fact, we've now expanded that to First Look, which is a newer solution that can take photos from literally any channel, whether it's a tow truck or a salvage, and actually inform more pieces of the process.

Hard to continue to Rev. The models improve the models.

And there what we said is that.

Even in Q4, we now added significantly more insurers.

And so more and more carriers are coming on stream carriers, who are using it for a very small fraction are rolling out to more states on an aggregate basis, it's still relatively low percentages. Even today and then we have literally a few weeks of experience now having.

Put it out in the repair facility market, maybe a couple of months or so maybe a month.

Githesh Ramamurthy: So we, the bottom line is, we feel very good. And Peter, the second part of your question asked about the contribution from emerging solutions. So in 23, it was one point of the total growth percent.

Italy volumes are small, but instead of taking 30 minutes to write an initial estimate.

We can see that jumpstart for example rights of estimate in about two minutes. It still requires some tweaking and making sure. It's in final final form, but we are seeing a significant amount of excitement. It is the first.

Major change in how the repair facilities.

Work and writing an estimate for a vehicle.

Brian Herb: One moment for questions. Our next question comes from Tyler Radke with Citi; you may proceed. Hi, this is Peter on the line for Tyler Radke. I just had one question here in regards to renewals, just looking back at the last few, Insurance Premiums and Repair Costs for Motor Vehicles. That's trending pretty at the top of the list.

So so we are we feel very good about the technology, we feel very good about the revs that we have made the improvements we're seeing and in fact, we've now expanded that to first look which is a newer solution.

That can take photos from literally any channel whether its toe.

Total truck or a salvage and actually informed more pieces of the process.

Tyler Maverick Radke: I'm just curious what approach you guys have had in terms of negotiating contract renewals with your customers. Would you say there's been more leverage on your end in terms of negotiating the price of the contract? You know, I would not say that there is any material difference in how we work with customers. I mean, we've worked with our customers for decades, and our formula is pretty straightforward. As we add new solutions, each of them has an ROI. These are mission-critical tools for our customers, and these are long-standing relationships. So I would not say that there's been any material change one way or the other. Yeah, I would just add.

So we so bottom line is we feel very good.

And Peter the second part of your question you asked about the contribution from emerging solutions. So in 'twenty three it was one point of the total growth percent.

We do expect that to step up.

This year.

Very helpful. Thank you both.

Thank you.

One moment for questions.

Our next question comes from Tyler Radke with Citi. You May proceed.

Hi, This is Peter on the line for Tyler Radke.

I just had one question here regards to renewals just looking back at the last few days.

Insurance premiums and repair costs for motor vehicles, that's trended like at the top of the list.

No I would not say that there is any material.

Difference in how we have worked with customers I mean, we've worked with our customers for decades.

And the Formula is pretty straightforward.

We add new solutions each of them has an ROI. These are mission critical tools for our customers and these are long standing relationships. So I would not say that there's been any material change one way or the other yes, I would just add I mean, we do continue to look at the package offerings that we take to our customers and we consider.

Okay. Thanks, and then just as a follow up too.

You said, a cross sell and upsell is going to be like a larger contribution to growth in fiscal 'twenty. Four is there any way to quantify how much of that would be from established solution versus emerging solutions.

Well, we've talked about in the long term guide is that.

Saket Kalia: Great to hear that emerging is going to be a bigger driver of growth in 2024. Maybe just to make sure that the question is asked, as that becomes a bigger part of the business, are there any things that we should keep in mind from just a margin perspective? Like, are the margins on the emerging products significantly different from, you know, what I'll call the core part of the portfolio? Yeah, good question, Saket.

Can we talk about seven to 10 organic growth in the long term guide, we say 20% of that will come from new logos and then we say the balance comes from cross sell and up sell and then what we've done is we've broken that in half and half of that will come from the established solutions set of end market for several years and the other half will come from these emerging.

<unk>. So that's how we've broken it out over the long term.

We'll continue to progress towards those longer term metrics.

Thank you.

One moment for questions.

Our next question comes from Korea.

Korea with Barclays You May proceed.

Okay, Great Hey, guys. Thanks for taking my questions here nicely done.

Yes.

Brian maybe I'll start with you.

Great to hear that emerging is going to be a bigger driver of growth in 2024.

What I'll call the core part of the portfolio.

Yeah, two good questions.

So over time, when the emerging solutions get to scale and in our mature they will have similar margin characteristics of the established solutions we have today.

So they will have very high drop through.

We don't see really differences I think right now is theyre just starting to scale. There is margin dilution just as they get rolled out and the support cost.

We start to amortize them as they come into market and so the cost will be ahead of some of their revenue.

Till they get to scale, but as I said once they get to scale and start to mature the margin characteristics will look like the established solutions we have today.

Got it got it that makes sense.

Maybe for you maybe just to switch gears a little bit I was wondering if you could talk about the casualty business.

Little bit and sort of how you view that going into 2024.

An enviable enviable position in Apd among the top 20 carriers in particular, what sort of pipeline do you sort of see for more cross sell with casualty into that top 20 base does it makes sense.

Yep.

Just give you a quick.

Even in Q4, we saw the addition of a number of casualty customers. We added a number of casualty customers in.

Githesh Ramamurthy: So, we have continued to expand our casualty solutions, and we're seeing good uptake from customers. And then, what we also see is industry-leading, first-of-its-kind solutions like Impact Dynamics, which takes the physics of an accident, the 3D physics of an accident, and imputes, you know, potential for injury and provides early warning of which claims may need more attention and the like. So, those are also being well-received. Again, that is something that does not exist in the market at all.

In 2023 with that said the number of our Apd customers that are using our casualty solution is still it's still relatively small. So we have continued to expand our casualty solutions, we're seeing good uptake from customers and then.

What's also.

Also see is industry, leading first of its kind solutions like impact dynamics, which takes the physics of an accident. The three D physics of an accident and Imputes.

Potential for injury.

<unk> provides early warning to reach claims may need more attention and alike. So those are also being well received again that is something that does not exist in the market at all so both in terms of traditional casualty solutions as well as completely new.

State of the art casualty solutions with AI. So we're continuing to see good adoption.

So feel good about the long term prospects.

Absolutely thanks, guys.

Dylan Tyler Becker: Thank you. One moment for questions. Our next question comes from Dylan Becker with William Blair. You may proceed. Hey, guys, really nice job here. Maybe two for Gitesh, just from a high level, thinking about the hardening auto market, kind of what the implications of that mean for insurance carriers, how they think about the kind of factors and complexity impacting their business, and maybe how that incentivizes or, or unlocks some capacity to drive incremental investment around digital and kind of data-driven initiatives or opportunities.

Thanks.

Thank you.

One moment for questions.

Our next question comes from Dylan Becker with William Blair You May proceed.

Hey, guys really nice job here, maybe two.

Forget cash just from a high level thinking about the hardening auto market kind of what the implications are that means for insurance carriers, how they think about kind of factors in complexity impacting their business and maybe how that incentivize his or her unlock some capacity to drive incremental investment around digital and kind of.

Of data driven initiatives or opportunities.

Yes, I think.

Githesh Ramamurthy: Yeah, I think, you know, what we've seen is that the shock to the system that we saw in 2022 in terms of increased costs of parts and labor, and cycle time increases, so that drove significant increases, more so than anything we've seen over the last decade. So while those increases took place in 22, and then what we saw towards late 23, those increases are a little more moderate than the extreme that we saw in 22 and 23. And so customers have now looked at that capability. And also, our customers tend to view things over a long horizon. They don't, yes, while there are some challenges in the short term, our customers also see, you know, over the next three years and five years.

What we have seen.

Yes.

Is that the the <unk>.

Shock to the system that we saw in 2022 in terms of increased cost sell parts and labor side.

Cycle time increases so that drove significant increases more so than anything we've seen over the last decade. So while those increases took place in 'twenty two and then what we saw towards late 'twenty. Three is those increases are a little more moderate than the extreme that.

We saw in 'twenty, two and 'twenty three.

So customers have now looked at that capability and also.

Our customers tend to view things over a long horizon they don't yes.

There are some challenges in the short term our customers also see over the next three years and five years and we've had many conversations in many of our customers, who see fundamentally new ways of configuring their operations, using new technology and different technology to change the process to do.

Githesh Ramamurthy: And we've had many conversations with many of our customers who see fundamentally new ways of configuring their operations using new technology and different technology to change the process and do things very differently. And so, you know, I do think there's a stronger appetite that we see from our customers to adopt change processes, especially when you see, you know, significant improvement. Okay.

Do things very differently.

So.

I do think there is a stronger appetite that we see from our customers to adopt change processes, especially when you see significant improvements.

Githesh Ramamurthy: That makes a ton of sense. And then maybe that's a good segue to thinking about the impact dynamics offering and maybe how carriers are thinking about the convergence of those APD and casualty workflows by connecting more of that early stage data. I don't know, maybe those solutions operated independently in the past, but are you seeing kind of more of that convergence coming into play in those lines, kind of blurring, obviously creating some longer-term opportunity as you think about that cross-seller attach as well? Thank you. Well, over the long term, the answer is yes. In the short term, impact dynamics can work for any customer regardless of what traditional casualty solutions they're using. So I would say there is probably a quicker ramp for something like impact dynamics.

Okay got it that makes it kind of sense and then maybe that's a good segue to thinking about the impact of dynamics offering and maybe how carriers are thinking about the convergence of the.

Well thank you.

Well over the long term the answer is yes in the short term impact dynamics can work for any customer regardless of what traditional casualty solutions are using so I would say, that's probably a quicker ramp for something like impact dynamics.

Githesh Ramamurthy: And the linkages are increasing that more of these components can work together to let you manage the entire ecosystem of a claim, from end to end, from the first notice of loss all the way through settlement. And that's really where I think we differentiate ourselves in that we are in those workflows, we have applied artificial intelligence very heavily, and we continue to build out the ecosystem. So that's kind of how we see it playing out.

And the linkages are.

<unk>, increasing that the more of these components that can work together to let you manage the entire ecosystem of a claim.

<unk> end to end from loss from the first notice of loss all the way through settlement and Thats really where I think we differentiate ourselves in that we are in those workflows. We've applied artificial intelligence very heavily and will continue to build out the ecosystem.

So that's kind of how we see it playing out.

Dylan Tyler Becker: Very helpful. Thanks, guys. Congratulations again.

Very helpful. Thanks, guys Congrats again.

Joshua Phillip Baer: Thank you. One moment for questions. Our next question comes from Josh Baer with Morgan Stanley. Please proceed. Great, thanks for the question. The upside in the quarter was higher than typical, even after adjusting for the true ups. So I was just wondering, were the results in line with your expectations, like with this adjustment, or anything specific to call out that positively surprised you versus your internal plan? Yeah, hey, Josh. It's Brian.

Thank you one moment for questions.

Our next question comes from Josh Baer with Morgan Stanley You May proceed.

Great. Thanks for the question.

In the quarter was was higher than typical even after adjusting for the true ups. So I was just wondering.

Were the results in line with your expectations like with this adjustment or anything specific to call out that positively surprised you versus your internal plan.

Yeah, Hey, Josh it's Brian Yes, So we were really happy with the performance in the quarter, So 12 points and even when you normalize the yearend true ups and the one off revenue that was a point. So it was 11 and as you said it came in a lot stronger.

Brian Herb: Yeah, so we were really happy with the performance in the quarter. So you know, 12 points. And even when you normalize the year-end true ups and the one-off revenue, that was a point. So it was 11.

Brian Herb: And as you said, it came in a lot stronger than we had put out in the guidance. I'd say it was broad-based. So we saw strength across many of our APD clients. We saw strength in casualty, we saw strength in parts, very good ASG. So on the repair facility, upsells, and upgrades into packages. So there's nothing really one area to highlight that is kind of the driver for the overperformance.

When we put out in the guidance I'd say it was it was broad based.

So we saw strength across many of our Apd clients.

We saw strength in casualty, we saw strength in parts.

Good asps so on the repair facility up sells and upgrades into packages. So theres nothing really one area to highlight as kind of the driver for the over performance. It was very broad based set of results really across the portfolio. So we are pleased with the performance overall.

Brian Herb: It was a very broad set of results really across the portfolio, so we were pleased with the performance overall. Great. And one on the repair facility opportunity, obviously a lot more that you can sell back into your base, but wanted to ask about the penetration as far as new repair facilities go. Where are they coming from?

Great.

One on the repair facility opportunity, obviously, a lot more that you can sell back into your base, but wanted to ask about the penetration as far as new repair facilities.

Like where are they coming from what's the profile of that repair Phil facility are they are those new customers spending like more or less on average.

Githesh Ramamurthy: What's the profile of that repair facility? Are those new customers spending more or less than average? Just wondering for some more context there and if like a thousand per year is still a good number to think about going forward. Yeah, a couple of things.

Just wondering for some more context.

Like a thousand per year is still a good number to think about going forward.

Yes, a couple of things so first.

Githesh Ramamurthy: So first, you know, when I look back in 2010, we probably had about 20,000 repair facilities. We're now clicking towards pretty close to 30,000 repair facilities. And then when you look at how many of our repair facilities used one or two solutions, right, even as far back as, even a few years ago, we only had repair facilities using two or more of our solutions, about half of them.

When I look back in 2010, we probably added about 20000 repair facilities, we're now click.

Clicking towards pretty close to 30000 repair facilities.

Githesh Ramamurthy: Today, I would say just three, four years later, we see that half of our repair facilities are using four or more of our solutions. So there's a large installed base. And as we continue to deliver new solutions that really help them with their business, as they, as you know, they have capacity issues and are trying to look for more efficiencies. So that's really one very important path.

<unk> repair facilities are using four or more of our solutions. So there is a large installed base and as we continue to deliver new solutions that really help them with their business as they as they have capacity issues and trying to look for more efficiencies. So thats really one.

Very important path back to your the second part of your question, we do feel good about continuing to add repair facilities at the rate at which.

Githesh Ramamurthy: Back to the second part of your question, we do feel good about continuing to add repair facilities at the rate at which, you know, at the rate at which you saw, our estimate is there are probably roughly 40,000 repair facilities in the industry overall, and we still think there's ways to go to continue to grow. Thank you very much.

At the rate at which you saw.

Our estimate is that it's probably roughly 40000 repair facilities and the industry overall.

And.

We still think there is a ways to go to continue to grow.

Great. Thank you very much.

Thank you.

One moment for questions.

Our next question comes from Mike Funk with Bank of America, You May proceed.

Hi, Good session. Brian This is Matt <unk> on for Mike.

Githesh Ramamurthy: I had a quick one on estimate STP. Are you seeing a material improvement in estimate STP functionality as volumes have ramped up with customers and you continue to fine-tune those models? And if so, can you help us quantify it? And then, secondarily, has this led to a sort of flywheel with adoption? Yeah, I would say, you know, initially, we restricted it way back to private passenger vehicles; we added pickup trucks, then we restricted it to front impacts and back impacts.

I had a quick one on estimate STP.

Yes, I would say initially we had restricted it way back to private passenger vehicles to be added pickup trucks, then would be restricted to pay back and back impacts now we will open it up for <unk> impacts.

The extended across all models. The accuracy is significantly better were making more parts predictions more subtle very subtle damage versus obvious damage.

Githesh Ramamurthy: So the feedback loop we have with the scale of the feedback loop and the size of the data set we have, with both photos coming in and repairs and estimates flowing through, has really allowed us to improve quality substantially. And that's helped customers continue to expand to more and more states. And as well as, you know, from a reference standpoint, have been great references to other customers continuing to expand. So, we just see that adoption continuing to happen. And in terms of, Yeah, so I mean, as far as the claim volume is concerned, we're still, even though, as Githesh said, we're making progress with new clients and in the expansion of those existing clients. We're still at low, low rates. So if you think about kind of the total claims that are coming in, we're still in the single digits.

So the feedback loop, we have with really the scale of the feedback loop and the size of the data set we have with both photos coming in repairs and estimates flowing through <unk>.

Really allowed us to improve quality substantially and thats.

And.

In terms of.

Yes, so I mean as far as the it's Brian here as far as the.

The claim volume we are still even though its catastrophe, we're making progress with <unk>.

New clients on and the expansion of those existing clients. We are still at low low rates. So if you think about kind of the total claims that are coming through we are still in the single digit percentages.

Brian Herb: But as we sit here today, we feel really good about the opportunity that we've talked about in the medium and long term, as we think about, you know, the overall opportunity for SMA and STP. And this level, you know, the runways that we have across all of our different solution sets, is that even if you look at how we delivered Q4, much of that growth came from products and solutions that have been around for a long time. So we see all of these new solutions we're developing as having fairly long runways in terms of growth. Super helpful.

But as we sit here today, we feel really good about the opportunity that we've talked about.

In the medium long term as we think about the.

The overall opportunity for <unk> TP.

And this level the runways that we have across all of different solution sets is that even if you look at how we delivered Q4 much of that growth came from products and solutions that have been around for a long time. So we see all of these new solutions. We are developing to have fairly long runways in terms of.

Growth.

Brian Herb: One moment for questions. Our next question comes from Chris Moore with CJS Securities. You may proceed. Hi, this is Will Gilday on behalf of Chris Moore.

Super helpful. Thank you.

Thanks.

Thank you one moment for questions.

Our next question comes from Chris Moore with CJS Securities You May proceed.

Hi. This is will go down for Chris Moore, Congrats on a great year free cash flow margin has increased from 19, 4% in 'twenty to 'twenty two 5% in 2023 and based on your adjusted EBITDA guidance. It seems to be heading quickly into the mid twenties range can you give us any more color on how to think about this metric in 2020.

Christopher Paul Moore: Congratulations on a great year. Free cash flow margin increased from 19.4% in 22 to 22.5% in 2023. And based on your JustDb.gov guidance, it seems to be heading quickly into the mid-20s range. Can you give us any more color on how to think about this metric in 2024 and beyond? Yeah, good question.

<unk> four and beyond.

Yes good.

Brian Herb: Yeah, you're thinking about it the right way. I mean, it is; we're generating strong free cash flow. We've seen it progress from 19% to 23% last year. When you do the math that you just did, and you look at EBITDA and our unlevered free cash flow guidance that we've given out, which is roughly in the mid-60s of unlevered free cash flow to EBITDA, you get to the mid 20s. So you're doing the math right.

Yes, you are thinking about it the right way.

We're generating strong free cash flow.

You get to the mid 20, so youre doing the math right. We're certainly just seen.

Brian Herb: You know, we're certainly just seeing that as the revenue scales and the strong free cash flow, this will continue to grow. And so we feel really good about that performance and the opportunity in front of us with it. All right, that's all I have.

As the revenue scales in the strong free cash flow that this will continue to grow and so we feel really good on that performance and the opportunity in front of us with that.

Alright, Thats all I had thank you very much.

Brian Herb: Thank you very much. Thank you. Thank you. One moment per question.

Thank you. Thank you.

One moment for questions.

Shlomo H. Rosenbaum: Our next question comes from Shlomo Rosenbaum with TIFL. You may proceed. Hi Adam, this is Adam Parrington on behalf of Shlomo. Could you talk a little bit about how payments adoption is progressing? I believe last quarter you mentioned adoption is tracking a little bit slower than subrogation and estimate STP given the higher than expected complexity around the build out of specific customer use cases. Are those build outs complete now?

Our next question comes from Shlomo Rosenbaum with Stifel. You May proceed.

Hi, Dan This is Adam Parrington for Shlomo could you talk a little bit about how payments adoption is progressing I believe last quarter. You mentioned, an adoption is tracking a little bit slower than subrogation and estimate STP.

Given the higher than expected complexity around the build out of specific customer use cases are those build out is complete now and just kind of just general thoughts on how payments are trending thanks.

Githesh Ramamurthy: And just kind of general thoughts on how payments are trending? Thanks. Yeah, I would just say that it is slower than the other products that you're seeing.

Yes, I would just say that it is slower than the other products that youre seeing this is why we have a mix of a broad set of portfolio of solutions, we have because the adoption rates will vary.

But at the very fundamental level, what we are seeing in the work we're doing with customers is that many of the problems. We saw with payments in the claims process have not been solved.

And so the problems and the complexity. So there are product has improved the breadth of what we've built is improved and it do.

Githesh Ramamurthy: Our product has improved. The breadth of what we've built has improved. And we just think it'll take a little longer.

Do we just think it will take a little longer.

Githesh Ramamurthy: Thank you. I would now like to turn the call back over to Githesh Ramamurthy for a closing remarks. Hey, I just want to take the opportunity to thank everybody for your interest in CCC. I also would like to take the opportunity to thank the broader CCC team for incredible delivery in 2023 and our customers for their trust and the confidence they have in us as we go forward. And we remain very excited about the opportunities in front of us. And again, thank you all for joining us, and we look forward to giving you updates as we go forward. Thank you for your participation; you may now disconnect.

Okay. Thanks.

Thank you.

I'd now like to turn the call back over to.

Raymond Murphy for any closing remarks.

Hey, I just wanted to take the opportunity to thank everybody for.

Your interest in CCC also would like to take the opportunity to thank the broader CCC team for incredible delivery in two.

2023, and our customers for their trust and the confidence they have in us as we go forward.

And we remain very excited about the opportunities.

In front of Us and again, thank you all for joining and we look forward to giving you updates as we go forward.

Thank you for your participation you may now disconnect.

Q4 2023 CCC Intelligent Solutions Holdings Inc Earnings Call

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