Q1 2024 CCC Intelligent Solutions Holdings Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the CCC Intelligent Solutions first quarter fiscal 2020 earnings conference call. At this time, all participants are in a listen-only mode.

Good day and thank you for standing by welcome to the C. C C intelligent solutions first quarter fiscal 2020 for.

Earnings Conference 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.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you to hold your hand. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Bill Warmington, Vice President of Investor Relations. Please go ahead.

To ask a question during the session you will need to press star one on your telephone you.

We'll then hear an automated message and advising your hand is raised to withdraw your question. Please press star one again please.

Please be advised that today's conference is being recorded I would now like to hand.

Over to your speaker for today Bill.

Bill: Davidson Vice President of Investor Relations. Please go ahead Sir.

William Arthur Warmington: Thank you, operator. Good afternoon, and thank you all for joining us today to review CCC's first quarter 2024 financial results, which we announced in the press release issued following the close of the market. 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.

Bill Davidson: Thank you operator.

Bill Davidson: Good afternoon, and thank you all for joining us today to review <unk> first quarter 2024 financial results.

Bill Davidson: We announced in our press release issued following the close of market today joining.

Speaker Change: Joining me on the call are detached retina, Murphy, <unk>, chairman and CEO and Brian heard CCC CFO.

Speaker Change: 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 risks are discussed in the earnings releases available on our Investor Relations website and under the heading risk factors in our 2020.

Speaker Change: <unk> annual report on Form 10-K filed with the SEC.

William Arthur Warmington: 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 with the SEC. Further, these comments and the Q&A that follows are copyrighted today by CCC Intelligence 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.

Further these comments and the Q&A that follows are copyrighted today by CCC Intelligence solutions Holdings incorporated any recording retransmission or reproduction or other use of the same for profit or otherwise without prior consent of CCC is prohibited.

Speaker Change: I'll say that the United States copyright and other laws.

William Arthur Warmington: Additionally, while we will provide a transcript of portions of this call, and we've approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in the 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.

Speaker Change: Additionally, while we will 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 responsibility for inaccuracy that may appear in the transcripts.

Speaker Change: 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.

Speaker Change: A reconciliation of GAAP to non-GAAP measures is available in our earnings release that is available on our Investor Relations website. Thank you and now I'll turn the call over to detach.

Githesh Ramamurthy: Thank you, Bill. And thanks to all of you for joining us today. I am pleased to report that CCC began 2024 on a strong note. In the first quarter of 2024, CCC's total revenue was $227 million, up 11% year-over-year and ahead of our guidance. Adjusted EBITDA was $94 million, also ahead of our guidance, and our adjusted EBITDA margin was 41%.

Detach: Thank you Bill and thanks to all of you for joining US today I am pleased to report that CCC began 2024 on a strong note.

Detach: In the first quarter of 2020 for Ccc's total revenue was $227 million.

Detach: Up 11% year over year and ahead of our guidance range.

Detach: Adjusted EBITDA was 94 million also ahead of our guidance range and our adjusted EBITDA margin was 41%.

Githesh Ramamurthy: Our industry continues to be in the early innings of digital transformation, and CCC is well positioned to be our customers' partner of choice for that transformation. On today's call, I'd like to share how the CCC Intelligent Experience Cloud is helping our customers navigate this journey and the growing adoption we are seeing across our recent innovations. I'll also provide an update on the continued progress we have made in broadening our shareholder base. My first topic is the role of the CCC Intelligent Experience Cloud in enabling our customers' digital transformation. CCC was an early pioneer in SaaS and cloud computing with the initial launch of our cloud platform back in 2003.

Detach: Our industry continues to be in the early innings of digital transformation and CCC is well positioned to be our customers' partner of choice for that transformation.

Speaker Change: On today's call I would like to share how the CCC intelligent experience cloud.

Speaker Change: He is helping our customers navigate this journey and the growing adoption, we are seeing across our recent innovations.

Speaker Change: I'll also provide an update on the continued progress we have made in broadening our shareholder base.

Speaker Change: My first topic is the role of the CCC intelligent experienced cloud and enabling our customers' digital transformation.

Speaker Change: CCC was an early pioneer in SaaS and cloud computing with the initial launch of our cloud platform back in 2003.

Githesh Ramamurthy: Since then, we have continuously expanded and strengthened our capabilities, and today, our hyperscale 100% multi-tenant platform connects more than 35,000 companies and processes well over $100 billion of commerce annually. This technology backbone powers a wide range of mission-critical applications for the customers we serve, insurers, collision repairers, auto manufacturers, parts suppliers, and more, and is a key enabler of our ability to provide continuous innovation to customers with a rapid return on investment and minimal effort on deployment. Our cloud platform is also highly efficient.

Speaker Change: Since then we have continuously expanded and strengthened our capabilities and today, our hyperscale, 100% multi tenant platform connects more than 35000 companies and processes well over $100 billion of commerce annually.

Speaker Change: This technology back Paul Bowers, a wide range of mission critical applications for the customers, we serve insurers collision repairs auto manufacturers parts suppliers and more.

Speaker Change: <unk> is a key enabler.

Speaker Change: Our ability to provide continuous innovation to customers with a rapid return on investment and minimal effort on deployment.

Speaker Change: Our cloud platform is also highly efficient.

Githesh Ramamurthy: In 2023, our engineering teams deployed more than 1,400 releases to customers with high operating leverage, scalability, and reliability. Our transition from private to public cloud infrastructure last year further reinforced these advantages. Across the markets we serve, customers are increasingly looking to CCC to make it faster and easier to adopt our solutions and drive innovation into their business. This trend is being driven by a wide variety of forces, including macroeconomic changes, labor shortages, and increasing complexity in day-to-day operations, challenges that can best be addressed through a highly integrated, highly connected AI-enabled platform. And critically, they're looking to rapidly transform and simplify their businesses without disrupting their existing operations. Doing this at scale requires intelligent orchestration.

Speaker Change: In 2023, our engineering teams deployed more than 1400 releases to customers with high operating leverage scalability and reliability.

Speaker Change: Our transition from private to public cloud infrastructure last year further reinforce these advantages.

Speaker Change: Across the markets, we serve customers are increasingly looking to CCC to make it faster and easier to adopt our solutions and drive innovation into their business.

Speaker Change: This trend is being driven by a wide variety of forces, including macroeconomic changes labor shortages and increasing complexity in day to day operations challenges that can best be addressed through a highly integrated highly connected AI any.

Speaker Change: <unk> platform.

Speaker Change: And critically Theyre looking to rapidly transform and simplify their businesses without disrupting their existing operations.

Speaker Change: Doing this at scale requires intelligently orchestrating the data and workflows not just within a customer's four walls, but across the consumers and businesses.

Githesh Ramamurthy: The data and workflows, not just within a customer's four walls but across the consumers and businesses they interact with. And with the recent introduction of the CCC Intelligent Experience Cloud, or IX Cloud for short. We are enhancing our customers' ability to solve this many-to-many problem with a cloud platform they already use every day. The CCC-IX cloud overlays a new event-driven architecture on top of CCC's existing cloud applications, customer workflows, and customer and partner systems.

Speaker Change: With.

Speaker Change: And with the recent introduction of the CCC intelligent experience cloud.

Speaker Change: Our IX cloud for short.

Speaker Change: We are enhancing our customers' ability to solve this many if any problem with our cloud platform. They already use every day.

Speaker Change: The CCC IX cloud overlays, a new event driven architecture into ccc's existing cloud applications customer workflows and customer and partner systems.

Githesh Ramamurthy: This microservices-based approach will make it faster and easier for customers to deploy new CCC solutions and will also increase the number of ways customers can use multiple CCC solutions together. Customers do not need to upgrade as a CCC IX cloud represents an enhancement to their existing CCC cloud platform. It just gets better.

Speaker Change: Micro services based approach will make it faster and easier for customers to deploy new CTC solutions and we will also increase the number of ways customers can use multiple CCC solutions together.

Speaker Change: Customers do not need to upgrade as the CCC IX cloud represents an enhancement to the existing CCC cloud platform.

Speaker Change: Just gets better.

Githesh Ramamurthy: Throughout our history, CCC has helped customers navigate the complexity of our industry and used advanced, highly connected technology to solve the most pressing business problems. The CCCIX Cloud is designed to accelerate this journey in a way that is purpose-built to solve for the substantial increase in complexity in the PNC insurance economy we see today. Unlike most industries, where an existing supply chain converts raw materials into finished products and distributes them in a predetermined and repeatable manner, in the PNC insurance economy, the supply chain is created spontaneously after an accident occurs. Each insurance claim and collision repair is unique.

Speaker Change: What our history CCC is help customers navigate the complexity of our industry and used advanced highly connected technology to solve the most pressing business problems.

Speaker Change: <unk> cloud is designed to accelerate this journey.

Speaker Change: That is purpose built to solve for the substantial increase in complexity in the P&C insurance economy, we see today.

Speaker Change: Unlike most industries, where an existing supply chain convert raw materials into finished products and distribute them in a predetermined and repeatable manner. Instead in the P&C insurance economy. The supply chain is created spontaneously.

Speaker Change: After an accident occurs.

Speaker Change: Each insurance claim and collision repair is unique and so ark hundreds of different decisions.

Githesh Ramamurthy: And so are the hundreds of different decisions tasks and data flows that go into those claims and repair. These are crucial moments for our customers and their customers, and our new event-driven architecture helps to align this highly complex supply chain. So our customers can drive a step function improvement in their operating performance, and we are excited to see what they invent. My second topic is the growing adoption of our solution.

Speaker Change: And data flows that go into those claims and repairs.

Speaker Change: These are crucial moments for our customers and their customers and our new event driven architecture helps to align this highly complex supply chain. So our customers can drive a step function improvement in their operating performance and consumer and employee experience.

Speaker Change: We are excited to see what the impact.

Speaker Change: My second topic is the growing adoption of our solutions.

Githesh Ramamurthy: Our solid performance in Q1 was driven by the continued expansion of our multi-sided network and traction from new and existing solutions. In addition, we began rolling out the new Top 20 APD Insurance Client we announced last year, and we had multiple insurers renewing and expanding their relationships with CCC. We have also continued to add new repair facilities and parts suppliers to the CCC network.

Speaker Change: Our solid performance in Q1 was driven by the continued expansion of our multi sided network and traction from new and existing solutions.

Speaker Change: In addition, we began rolling out the new top 20, <unk> Apd insurance play, we announced last year and had multiple insurers renewing and expanding their relationships with CCC.

Speaker Change: We have also continued to add new repair facilities and part suppliers to the CCC network.

Githesh Ramamurthy: We also saw strong demand and adoption of our AI-enabled solutions across our different customers, for example Estimate STP. We continue to see progress across volume, adoption, and the number of clients testing, piloting, and rolling out other examples include CCC Segregation, a suite of solutions that applies AI and workflow automation to both outbound and inbound subrogation, as well as Impact Dynamics, which uses computer vision to predict potential injuries to the occupants of a vehicle involved in an accident based on photos of a damaged vehicle.

Speaker Change: We also saw strong demand and adoption of our AI enabled solution across our different customer groups for the <unk>.

Speaker Change: Estimate STP for example, we continue to see progress across volume adoption and the number of clients testing piloting and rolling out.

Speaker Change: Other examples are CCC subrogation, our suite of solutions that applies AI and workflow automation to both outbound and inbound subrogation as well as impact dynamics, which uses computer vision to predict potential injuries.

Speaker Change: To the occupants of a vehicle involved in an accident based on photos of the damaged vehicle.

Githesh Ramamurthy: Both of these solutions continue to deliver significantly positive results for customers using them, often in the multiple millions of dollars, resulting in growing interest from more customers. We expect these positive demand and adoption trends to continue given the significant bottom line benefits insurers are seeing from these solutions for repair facilities. We are continuing to add new rooftops and are seeing strong adoption of new products like Mobile Jumpstart, the solution we launched at the end of 2023 that uses AI to dramatically reduce the time it takes an estimator at a repair facility to generate an initial estimate, from an industry average of half an hour or more to less than two minutes. In Q1, almost 5,000 repair facilities used Jumpstart to complete tens of thousands of repairs.

Speaker Change: Both of these solutions continued to deliver significantly positive results for customers using them.

Speaker Change: Often in the multiple millions of dollars.

Speaker Change: Resulting in growing interest from our customers.

Speaker Change: We expect these positive demand and adoption trends to continue given the significant bottom line benefits insurers are seeing from these solutions.

Speaker Change: For repair facilities, we are continuing to add new rooftops and are seeing strong adoption of new products like mobile jumpstart. The solution. We launched at the end of 2023 that uses AI to dramatically reduce the time it takes an estimate there.

Speaker Change: Care facility to generate an initial estimate from.

Speaker Change: From an industry average of half an hour or more to less than two minutes.

Speaker Change: In Q1, almost 5000 repair facilities use jumpstart to complete tens of thousands of repair estimates.

Githesh Ramamurthy: We're also continuing to see strong interest in the expansion of CCC One beyond its traditional focus on repair operations to help our customers run their businesses overall. Two examples of such solutions are Amplify, a quick and easy way for repair facilities to set up a modern, professional-looking website with deep integration into CCC One, and our consumer payment solution, which has already enabled over a billion dollars in partner payment collection for our repair facility customers.

Speaker Change: We're also continuing to see strong interest in the expansion of CCC one beyond its traditional focus on repair operations to help our customers run their businesses overall.

Speaker Change: Two examples of such solutions, our amplify a quick and easy way for repair facilities to setup, a modern professional looking website with deep integration into CCC, one and our consumer payment solution, which is already enabled over $1 billion in partner payment collections for aggregates.

Speaker Change: Customers.

Githesh Ramamurthy: We feel good about the early traction and growth potential for both of these solutions and see many additional category expansion opportunities for repair facilities, given our platform, network, and AI capabilities. The progression of these and other new solutions follows a pattern of innovation that we have observed over multiple decades. Building a great product grounded in tangible customer value with a rapid ROI provides a long-term runway for growth and strong, referenceable customer relationships, which in turn leads to additional opportunities.

Speaker Change: We feel good about the early traction and growth potential for both of these solutions and see many additional category expansion opportunity.

Speaker Change: Our repair facilities, given our platform network and AI capabilities.

Speaker Change: The progression of these and other new solutions follows a pattern of innovation that we've observed over multiple decades.

Speaker Change: Building, a great product grounded in tangible customer value.

Speaker Change: With a rapid ROI provides a long term runway for growth and strong referenced <unk> customer relationships.

Speaker Change: Which in turn leads to additional opportunities.

Githesh Ramamurthy: The credibility we established with our original product, a tool to help insurers assess total loss, provided a pathway for us to deploy a state-of-the-art solution estimating damage to repairable vehicles. We then extended those same estimated capabilities to repair facilities, establishing direct repair and the expansive insurer repair facility network that exists today. In the years since, a steady stream of industry-first innovation has extended our platform and delivered additional value to customers, including workflow tools for insurers to manage the appraisal process, and Advanced Operating System for Repair Facilities, which will then manage the debris operation. Integrated Park Sortering with Thousands of Connected Parks Suppliers, mobile and then AI-based digital solutions that range from first notice of loss to appraisal to casualty and even subrogation and more.

Speaker Change: The credibility, we established with our original product a tool to help insurers assess total losses provided a pathway for us to deploy a state of the art solution estimating damage through repeatable vehicles.

Speaker Change: We then extended those same estimating capabilities to repair facilities.

Speaker Change: <unk> direct repair and the expansive insurer repair facility network that exists today.

Speaker Change: In the year.

Speaker Change: Steady stream of industry first innovations.

Speaker Change: We extended our platform and deliver additional value to customers.

Speaker Change: Workflow tools for insurers to manage the appraisal process and advanced operating system for repair facilities to help them manage their degree operations integrated parks chaudhary with thousands of connected parts suppliers mobile and then AI based digital solutions that range from first notice of loss.

Githesh Ramamurthy: Our track record of delivering these and other innovations has, at its core, been enabled by the depth of our customer relationships with insurers, collision repairers, parts suppliers, and auto manufacturers. The result is an innovation flywheel that lets us incubate new concepts, test them with initial customization, and then deploy reference-level solutions at scale across our and because we have such a broad portfolio of innovations. Different customers can adopt different solutions at different increments based on their particular needs over time.

Speaker Change: Appraisal to casualty and even subrogation and more.

Speaker Change: <unk> track record of delivering these and other innovations has at its core been enabled by the depth of our customer relationships with insurers collision repairs parts suppliers and auto manufacturers.

Speaker Change: The result is an innovation flywheel that lets us incubate new concepts test them with initial customers and then deploy reference level solutions.

Speaker Change: Scale across our customer base.

Speaker Change: And because we have such a broad portfolio of innovation.

Speaker Change: Different customers can adopt different solutions in different increments based on their particular needs over time.

Githesh Ramamurthy: This dynamic is at the heart of our durable long-term business model and enables us to consistently invest in R&D across economic sectors. $150 million last year and well over a billion dollars in the past decade, and with our projected 2024 revenue, representing a fraction of the $10 billion plus market opportunity we see in digitizing the PNC insurance economy.

Speaker Change: This dynamic is at the heart of our durable long term business model and enables us to consistently invest in R&D across economic cycles.

Speaker Change: $150 million last year, and well over $1 billion in the past decade.

Speaker Change: And with our projected 2024 revenue rec.

Speaker Change: Presenting a fraction of the $10 billion plus market opportunity, we see in digitizing. The P&C insurance economy. We believe we have decades of growth ahead of us.

Githesh Ramamurthy: We believe we have decades of growth ahead. My third and final topic is an update on the continued progress we have made in broadening our shareholder base since going public. We have made significant advances in expanding our shareholder base and increasing the liquidity of our company. The Secondary Offerings and Block Trades from our Private Equity Investors, over the past six months, have increased our public float as a percent of total shares outstanding as measured from Bloomberg from about 30 percent in October of last year to about 60 percent currently.

Speaker Change: My third and final topic is an update on the continued progress we have made in broadening our shareholder base.

Speaker Change: Since going public we have made significant advances in expanding our shareholder base and increasing the liquidity of our shares.

Speaker Change: The secondary offerings and block trades from our private equity investors over the past six months.

Speaker Change: Increased our public float as a percent of total shares outstanding as measured from Bloomberg from about 30% in October of last year.

Speaker Change: 60% currently.

Githesh Ramamurthy: We see this as an important development towards fulfilling our commitment to our shareholders. Let me conclude by saying that we are excited about what we have planned for 2024. The rising demand for AI-based solutions across our customer base, combined with our track record of driving growth through innovation and increasing the ease of adopting our solution through the CCCIX Cloud, gives us confidence 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 in more detail. Thanks, Gitesh.

Speaker Change: We see this as an important development towards fulfilling our commitment to our shareholders.

Speaker Change: Let me conclude by saying that we are excited about what we have planned for 2020 for the rising demand for AI based solutions across our customer base combined with our track record of driving growth through innovation and increasing the ease of adopting our solutions.

Speaker Change: Via the CCC IX cloud gives us confidence 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 in more detail.

Brian Herb: As Gitesh highlighted, we are seeing strong innovation and momentum across the business, as reflected in our track record of driving growth through category expansions and cross-selling. Our IX cloud architecture enables easier client adoption of our solutions and our durable business model. We are pleased with both top and bottom line performance, which reflects a balance between investment in our growth initiatives and ongoing margin discipline. Now, as we turn to the numbers, I will review first quarter 2024 results and then provide guidance for the second quarter and full year 2024. Total revenue in the first quarter was $227.2 million, up 11% from the prior year period.

Brian: As <unk> highlighted we are seeing strong innovation and momentum across the business as reflected in our track record of driving growth through category expansion and cross selling our IX cloud architecture enables easier client adoption of our solutions and our durable business model. We are please.

Brian: <unk> with both top and bottom line performance, which reflects a balance between investment in our growth initiatives and ongoing margin discipline now as we turn to the numbers I will review first.

Brian Herb: Approximately 8 points of our growth in Q1 was driven by cross-sell, up-sell, and adoption of our solutions across our client base, including repair shop package upgrades, continued adoption of our digital solutions, and the ongoing strength in casualty employment. Additionally, approximately three points of growth came from our new logos, mostly with repair facilities and parts suppliers. About one point of growth in Q1 came from our emerging solutions, mainly diagnostics, estimate STP, and segregation. 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.

Brian: <unk> first quarter 2024 results and then provide guidance for the second quarter and full year of 2024.

Brian: Total revenue in the first quarter was $227 2 million up 11% from the prior year period.

Brian: <unk> eight points of our growth in Q1 was driven by cross sell upsell and adoption 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 approximately three points of growth came from our new logos, mostly with repair.

Brian: <unk> and part suppliers.

Brian: About one point of growth in Q1 came from our emerging solutions, mainly diagnostics estimate STP and segregation.

Brian Herb: In Q1 2024, our GDR was 99%, which is in line with last quarter. Note that since the first quarter of 2020, our GDR has been between 98 and 99% and is either rounded up or down, driven primarily by repair shop industry churn. We believe our strong 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 business. Software Net Dollar Retention, or NDR, captures the amount across on upsell from our existing customers compared to the prior year period, as well as volume movements in our auto physical damage client base.

Brian: 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 Q1, 2024, or <unk> with 99%, which is in line with last quarter note that since the first quarter of 2020, our GDR.

Brian: Has been between 98%, 99% and as either rounded up or down driven primarily by repair shop industry churn.

Brian: We believe our strong 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 to a predictable and resilient business model software net dollar retention or <unk> captures the amount of cross selling.

Brian: <unk> from our existing customers compared to the prior year period, as well as volume movements and our auto physical damage client base in Q1, 2024, or <unk> was 107 consistent with our average across 2023 now.

Brian Herb: In Q1 2024, our NDR was 107, consistent with our average across 2023. Now I'll review the income statement in more detail. As a reminder, unless otherwise noted, all metrics are non-GAAP. We provide a reconciliation of GAAP to non-GAAP metrics in our press release. Adjusted gross profit in the quarter was $177 million.

Brian Herb: Adjusted gross profit margin was 78%, down slightly from 79% in Q4 and up again to 76% in Q1 of 2023. The stronger year-over-year adjusted gross profit margin primarily reflects operating leverage on the incremental revenue. Overall, we feel good about the operating leverage and scalability of our 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 Q1 2024 was $92.9 million, which is up 8% year over year.

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

Brian: Adjusted gross profit in the quarter was $177 million adjusted gross profit margin was 78% down slightly from 79% in Q4 and up against 76% in Q1 of 2023, the stronger year over year adjusted gross profit margin, primarily reflects operating leverage on the incremental revenue.

Brian: Overall, we feel good about the operating leverage and scalability of our business model and our ability to deliver against our long term adjusted gross profit margin target of 80%.

Brian Herb: This was mainly driven by higher IT-related costs, as well as investment in our customer facing business. Adjusted EBITDA for the quarter was $93.7 million, up 18% year-over-year, with an adjusted EBITDA margin of 41%. Now turning to the balance sheet and cash flows, we ended the quarter with $191 million in cash and cash equivalents. 782 million in debt. At the end of the quarter, our net leverage was 1.6 times adjusted EBITDA. Free cashflow in Q1 was 39.6 million, compared to 18.5 million in the prior year period.

Brian: In terms of expenses adjusted operating expense in Q1, 2024 was $92 9 million, which is up 8% year over year. This was mainly driven by higher it related costs as well as investment in our customer facing functions adjusted EBITDA for the quarter was $93 7 million.

Brian: Up 18% year over year with an adjusted EBITDA margin of 41%.

Brian: Now turning to the balance sheet and cash flows we ended the quarter with $191 million in cash and cash equivalents.

Brian: $782 million of debt at the end of the quarter. Our net leverage was one six times adjusted EBITDA free cash flow in Q1 was $39 6 million compared to $18 5 million in the prior year period free cash flow on a trailing 12 month basis was $216 million, which is up 56%.

Brian Herb: Free cashflow on a trailing 12-month basis was 216 million, which is up 56% year over year. Our trailing 12-month free cashflow margin in Q1 2024 was 24% compared to 17% a year ago. Unleveraged free cash flow in Q1 was $52 million, or approximately 55% of our adjusted EBITDA.

Brian: Year over year, our trailing 12 month free cash flow margin in Q1, 2024 was 24% compared to 17% a year ago.

Brian: Unlevered free cash flow in Q1 was $52 million or approximately 55% of our adjusted EBITDA Q1 is usually our lowest conversion quarter because thats when we pay our annual incentives, while our level of free cash flow can vary quarter to quarter. We expect it to continue to average out in the mid 60% range of our <unk>.

Brian Herb: Q1 is usually our lowest conversion quarter because it's when we pay our annual income. While our level of free cash flow can vary quarter to quarter, we expect it to continue to average out in the mid 60% range of our adjusted EBITDA on an annual basis. I'll now cover guidance beginning in Q2 2024. We expect total revenue of $228.5 to $230.5 million, which represents 8 to 9% growth year over year. We expect adjusted EBITDA of $89 to $91 million, a 39% adjusted EBITDA margin at the midpoint.

Brian: Adjusted EBITDA on an annual basis.

Speaker Change: I will now now cover guidance beginning in Q2 2024, we expect total revenue of $228 five to $230 5 million, which represents 8% to 9% growth year over year, we expect adjusted EBITDA of 89 to 91 Million% to 39% adjusted EBITDA margin at the mill.

Brian Herb: For the full year 2024, we expect revenue of $944 to $950 million, which represents 9 to 10% year over year growth. We expect adjusted EBITDA of $389 to $395 million, which represents a 41% adjusted EBITDA margin at the midpoint. So, three things to keep in mind as you think about our second quarter and full year guidance for 2024. The first point is that we remain confident in our 2024 financial targets and have increased the midpoint of our guidance ranges.

Speaker Change: Point for the full year 2024, we expect revenue of $944 million to $915 million, which represents 9% to 10% year over year growth. We expect adjusted EBITDA of 389 to 395 million, which represents 41% adjusted EBITDA margin at the.

Speaker Change: <unk> point, so three things to keep in mind as you think about our second quarter and full year guidance for 2024.

Speaker Change: The first point is that we remain confident in our 2024 financial target and have increased the midpoint of our guidance ranges. We're pleased with the broad based strength that we saw across the business in Q1, but keep in mind that year over year revenue growth rates can vary quarter to quarter because of contract timing variations.

Brian Herb: We're pleased with the broad-based strength that we saw across the business in Q1, but keep in mind that year-over-year revenue growth rates can vary quarter to quarter because of contract timings, variations in subscription revenue contracts with volume-based elements, and the pace of client adoption of new solutions. The second point is that emerging solutions contributed about one point of growth in Q1, and we expect the upsell-crosssell of these new solutions will contribute about two points of growth in 2024 as they continue to scale.

Speaker Change: Subscription revenue contracts with volume based elements and the pace of client adoption of new solutions. The second point is that the emerging solutions contributed about one point of growth in Q1, and we expect the upsell cross sell of these new solutions will contribute about two points of growth in 2024 as they continued to scale.

Brian Herb: As Gitesh mentioned in his remarks, we are seeing positive feedback and client engagement around these emerging solutions, and this gives us confidence about their contribution to growth in the back half of 2024. The third point is that in prior years, we experienced seasonality in our adjusted EBITDA margin, with the second half levels being above our first half levels, and Q2 being the low point for the year.

Speaker Change: <unk> mentioned in his remarks, we are seeing positive feedback and client engagement around these emerging solutions and this gives us confidence about the contribution to growth in the back half of 2024.

Operator: 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. Overall, the strong trends we're seeing in renewals, relationship expansions, and new solution adoptions reinforce our confidence in the underlying strength of the business. The combination of our durable business model, advanced AI capabilities, interconnected network, and broad solution set puts us in a unique position to help our customers in the P&T insurance economy reduce their cycle times and administrative costs while improving their consumers' experience throughout the claims process.

Speaker Change: The third point is that in prior years, we experience seasonality in our adjusted EBITDA margin with the second half levels being above our first half levels in Q2 being the low point for the year, we expect 2024 to be consistent with this pattern with the first half margins being constrained by the reset of employee related.

Speaker Change: And the cost of our industry conference.

Speaker Change: Overall, the strong trends, we're seeing in renewals relationship expansions and new solution adoption reinforces our confidence in the underlying strength of the business.

Speaker Change: The combination of our durable business model advanced AI capabilities interconnected network and the broad solution set puts us in a unique position to help our customers in the P&C insurance economy reduce their cycle times and administrative costs, while improving their consumers experience throughout the claims process.

Speaker Change: Yes.

Operator: We are confident in our ability to deliver against our long-term target of seven to 10% organic revenue growth in the mid-40s adjusted EBITDA margin as we continue to execute on our strategic priorities and generate value for both our customers and our shareholders. With that, operator, we're now ready to take questions. Thank you.

Speaker Change: We are confident in our ability to deliver against our long term target of 7% to 10% organic revenue growth and mid Forty's adjusted EBITDA margin as we continue to execute on our strategic priorities and generate value for both our customers and our shareholders with that operator, we are now.

Speaker Change: We're ready to take questions. Thank you.

Operator: As a reminder, if you would like to ask a question, please press star 11 on your telephone. Please wait for your name and company to be announced before you proceed with your question. As always, we ask that you limit yourself to one question and one follow-up.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you would like to ask a question. Please press star one on your telephone.

Speaker Change: Please wait for your name and company to be announced before you proceed with your question.

Speaker Change: Well, we ask that you limit yourself to one question one follow up one moment for our first question.

Saket Kalia: Our first question comes from Saket Kalia of Barclays. Your line is open. Okay, great. Hi, guys. Thanks for taking my questions here and a nice, nice strong start to the year. Thanks, thanks. Sure. Githesh, maybe I should start with you.

Speaker Change: Our first question comes from Sicad clear of Barclays. Your line is open.

Sicad: Okay, Great Hi, guys. Thanks for taking my questions here and nice nice strong start to the year.

Speaker Change: Thanks.

Githesh Ramamurthy: Listen, the quarter and the guide are pretty straightforward to the earlier point, so maybe I'll just start with a higher-level educational question. Can we just talk a little bit about the competitive environment in the casualty market? You know, I think you've talked about how there's plenty of room for adoption for casualty within your APD customer base. What types of solutions do you need to replace to make that happen?

Speaker Change: Sure.

Sicad: Catastrophe maybe to start with you.

Sicad: The quarter and the guide are pretty straightforward to the earlier point. So maybe I'll just start with a higher level of educational question can we just talk a little bit about the competitive environment in the casualty market. Thank.

Speaker Change: You've talked about how there is plenty of room for adoption for casual tweak within your customer base, what types of solutions that you need to displace to make that happen and maybe just qualitatively how are those conversations sounding maybe more recently.

Saket Kalia: And maybe just qualitatively, how are those conversations sounding maybe more recently? Sure, Saket. Just to kind of dial back, like you said, a little further. So first and foremost, what we're seeing across the board for our customers is the complexity of managing medical claims and the dollars involved are increasing significantly. And they vary by geography, vary by jurisdiction; there's a lot more complexity, and a lot more costs starting to creep in.

Sicad: Sure.

Speaker Change: Just to kind of dialed back like you said a little further so first and foremost what we're seeing across the board for our customers is complexity of managing medical claims in the dollars involved are increasing significantly and they vary by geography vary by jurisdiction as a lot more complex.

Speaker Change: A lot more cost starting to creep in.

Githesh Ramamurthy: And one of the key advantages that we bring to the table that is fairly unique is that one in every five auto claims results in a medical claim. So when you have visibility to the breadth of the auto-physical damage claims that we have, the physics of the accident actually help inform what may or may not happen downstream, and that's a very important connection between the auto-physical damage side of the business and what happens when you have to deal with a medical claim So there are some very unique things we have visibility into.

Speaker Change: And one of the key advantages that we bring to the table that is fairly unique is that.

Speaker Change: One in every five auto claim results in a medical claim.

Speaker Change: So when you have visibility to the breadth of the auto physical damage claims that we have the physics of the accident actually help inform what may or may not happen downstream and thats, a very important connection between the auto physical damage side of the business and what happens when you have to deal with.

Speaker Change: Medical claim.

Speaker Change: So there are some very unique things we have visibility to.

Githesh Ramamurthy: One of the examples of that is when we introduced Impact Dynamics, which is an AI-based solution that takes the physics of the accident, the photos of the accident, and predicts the potential impact of medical claims and projections down the road.

Speaker Change: One of the examples of that is when we introduced impact dynamics, which is an AI based solutions to it takes the physics of the accident the photos of the accident Imputes.

Speaker Change: The potential impact of.

Speaker Change: Medical claims and projections down the road, that's a very very unique offering and that is one that can be adopted by whether existing or existing customers or not people can adopt it and I think we mentioned in the last probably last call that we had a top five carrier.

Githesh Ramamurthy: That's a very, very unique offering, and that is one that can be adopted by existing or existing customers, or not; people can adopt it. And I think we mentioned in the last, probably last call, that we had a top five carrier adopt that solution and saw a significant impact. So that's the linkage.

Speaker Change: <unk> adopt that solution and saw significant impact. So that's so that's the linkage.

Githesh Ramamurthy: I would just say, on a broader basis, we have continued to see, over the last year, more clients adopt our casualty solutions, and there's always some unique aspect in terms of challenges that they're trying to solve, and that's really where we've been very focused, working with customers to solve those problems. So that's really kind of the overall view of what we're seeing, but the bottom line is we are continuing to see adoption by customers in cash flow. I got it.

Speaker Change: Say on a broader basis, we have continued to see over the last year more clients adopt our.

Speaker Change: Casualty solutions and.

Speaker Change: There is always.

Speaker Change: Some unique aspect and trumps challenges, they're trying to solve and that's really where we've been very focused is working with customers to solve those problems. So thats really kind of the overall view.

Speaker Change: What we're seeing but bottom line is we are continuing to see adoption of customers on casualty.

Saket Kalia: That's, that's very clear, very helpful. Brian, maybe for my follow up for you. You know, you've talked about sort of the growing contribution from emerging solutions. I think we said it would go from one point of growth here in Q1 to maybe two points for the year. Can, can you just talk a little bit about what degree of visibility you kind of have into that? You know, is that, is that growth? I mean, that's, that's very healthy growth, of course, off a small base.

Speaker Change: Got it.

Speaker Change: Very clear very helpful.

Speaker Change: Brian maybe for my follow up for you.

Brian: You've talked about sort of the growing contribution from emerging solutions I think we said it will go from one point of growth here in Q1 to two maybe two points for the year can you just talk a little bit about what degree of visibility you have into that is that is that growth.

Brian Herb: But is that sort of dependent on volume usage? Or is there some element of sort of contracted visibility that you have into that, which gives you confidence in that, into that increasing growth contribution? Yeah, sure, Saket.

Speaker Change: Very healthy growth of course off a small base, but is that sort of dependent on on volume usage or is there some element of sort of contracted visibility.

Speaker Change: Do you have into that which gives me confidence interval into that increase in growth contribution.

Brian Herb: So just on the metrics, so Q1, as you said, we had one point of growth from emerging solutions. We do expect that to step up and continue to scale as we go through the year. We're expecting two points of growth contribution from emerging solutions for the full year. To the question around visibility, you know, we look at it in three areas.

Speaker Change: Yeah sure second.

Speaker Change: Just on the metrics. So Q1 as you said, we had one point of growth from the emerging solutions, we do expect that to step up and continue to scale as we go through the year, we're expecting two points of growth contribution from emerging for the full year to the question.

Speaker Change: Around visibility, we look at it around three areas. One is existing clients that are using the product paying for the product.

Brian Herb: One is existing clients that are using the product, paying for the product, and they continue to ramp up their volume. And we have visibility into that. We also have clients that are testing the product and will move from test into pay and full production rollout, which again, there's good visibility. And then the third is converting pipelines, assigning new clients to these new solutions. So across those three areas, we have good visibility and feel confident in the step-up that we're expecting in the second half.

Speaker Change: <unk> continued to adopt volume and ramp up their volume and we have visibility into that we also have clients that are testing the product and we will move from test and to pay.

Speaker Change: And full production rollout, which again there is good visibility and then the third is converting pipelines is signing new clients onto these new solutions. So across those three areas. We have good visibility and feel confident in the step up that we're expecting the second half as catastrophe aid in his remarks.

Brian Herb: As Githesh made in his remarks, you know, the positive feedback from clients that are using the product or testing the product, the operating metrics that we're seeing as they're testing it, it is all very, going well. And we do feel that the step up, you know, as we get into the second half year and then towards the long term, we talk about emerging solutions being more like three to four points of growth. And that will develop over time. It's great to hear.

Speaker Change: The positive feedback from clients that are using the product are testing the product.

Speaker Change: The operating metrics that were seen as their test in is all vary.

Speaker Change: Is going well and we do feel that the step up.

Speaker Change: As we get into the second half year.

Speaker Change: And then towards the long term, we talk about the emerging solutions being more like three to four points of growth and that will develop over time.

Saket Kalia: Thanks, guys. Thank you. Thank you.

Speaker Change: Great to hear thanks, guys.

Speaker Change: Thank you.

Operator: One moment for the next question, and our next question will be coming from Michael Funk of Bank of America. Your listening is open.

Speaker Change: Thank you wouldn't normally for the next questions.

Speaker Change: And then we will be coming from Michael Li of Bank of America.

Speaker Change: Please.

Michael J. Funk: Yeah, great. Thank you for the question tonight, guys. So Gitesh, first one for you, you mentioned a few times in the call that customers are very early in the cloud transformation and obviously highlighted the benefits from the emerging solutions. So, you know, maybe just, you know, remind us of the revenue opportunity from products like S&TP and subrogation. I mean, clearly, the highly repeatable, you know, human interaction events are very, you know, very attractive to replace with AI.

Michael J. Funk: Yes, great. Thank you for the question Tonight, guys. So catastrophe <unk> one for you you mentioned a few times on the call.

Michael J. Funk: Customers are very early in the cloud transformation and obviously you highlighted the benefit from the emerging solution. So.

Speaker Change: Maybe just remind us.

Michael J. Funk: Of the revenue opportunity from the products like aspirin FTP.

Speaker Change: Subrogation, I mean, clearly the highly repeatable.

Speaker Change: Human interaction events are very very attractive to replace with AI. So where are we in that transformation and do you expect we'll see a tipping point.

Githesh Ramamurthy: So, you know, where are we in that transformation, and do you expect we'll see a tipping point in the adoption as we ramp towards the revenue opportunity you've talked about? Maybe you want to highlight that again tonight?

Speaker Change: The adoption if you ramp towards that.

Speaker Change: The revenue opportunity you've talked about maybe one comment again Tonight.

Githesh Ramamurthy: Sure, sure, Michael. Let me kind of start with some broad-based patterns that we've really seen with our customers over literally the last two or three decades. So, what typically happens is that, you know, customers are continuously looking to deal with complexity. I'll give you, you know, a couple of minor examples that lead into some major decisions, right? For example, the number of parts per vehicle used to be eight parts per vehicle.

Speaker Change: Sure sure Michael Let me kind of start with the first broad based patterns that we've really seen with their customers or literally last two or three decades. So what typically happens is that.

Michael J. Funk: Customers are continuously looking to deal with complexity.

Michael J. Funk: I'll give you.

Michael J. Funk: A couple of minor examples that lead into some major decisions right. The number of parts per vehicle used to be eight parks.

Michael J. Funk: Eight parts per vehicle today, we're up to 14 parts per vehicle.

Githesh Ramamurthy: Today we're up to 14 parts per vehicle. So the complexity on a whole range of fronts is increasing, and at the same time, the macro trend we've talked about, which is the number of experienced people in the industry, is decreasing, both for our insurance customers and repair facilities. The demand for experienced people is strong, whereas the supply of really talented and capable people is less.

Michael J. Funk: So the complexity on a whole range of fronts is increasing and at the same time the macro trend we've talked about which is the number of experienced people in the industry is decreasing both for our insurance customers repair facilities.

Michael J. Funk: The demand for experienced people.

Michael J. Funk: His strong, whereas the supply of really talented and capable people is less so across the board our customers are trying to solve more complex problems in a more effective and more efficient manner.

Githesh Ramamurthy: So across the board, our customers are trying to solve more complex problems in a more effective and more efficient manner, and that is the big, broad, macro trend that we have seen. And what we are now seeing, especially as pricing starts to normalize, is that customers are starting to be much, much more thoughtful about digital transformation in a broader way. So we are seeing more interest in digital transformation.

Michael J. Funk: That is the big broad macro trend that we have seen.

Michael J. Funk: And what we are now seeing especially as pricing starts to normalize.

Michael J. Funk: What we are seeing as customers start to make much much more thoughtful about digital transformation in a broader way. So we are seeing more interest in digital transformation. If you remember when we introduced our first our AI solution, which went from photo to an estimate I think that was <unk>.

Githesh Ramamurthy: If you remember when we introduced our first AI solution, which went from photo to estimate, I think that was in November of 2021. AI was not widely talked about as it has been, let's say, in the last 12 to 18 months.

Michael J. Funk: Remember of 2021.

Michael J. Funk: AI was not widely talked about as it has been let's say in the last 12 to 18 months.

Githesh Ramamurthy: So people are starting to really get comfortable that AI has a capability that amplifies their people's capability to handle more decisions more quickly across the board. So that macro view of digitizing, using technology to make decisions is happening. So now getting to the specifics of your question. So when you look at something like estimate, so when you look at something like estimate SDP, what you're seeing is that it really speeds the ability for staff appraisers, for consumers to send in pictures, get an estimate, or jumpstart the repair facility really substantially reduces the speed at which estimates can be produced.

Michael J. Funk: So people are starting to really get comfortable that AI as a capability that amplifies their people's capability to handle more decisions more quickly across the board so that macro view of digitizing using technology to make decisions.

Michael J. Funk: Is happening so now getting to the specifics of your question. So when you look at something like estimate. So when you look at something like estimate SDB, what youre seeing is that it really speeds the ability for staff appraisers.

Michael J. Funk: <unk> and pictures getting estimate or Jumpstarted, the repair facility really in subs.

Michael J. Funk: Substantially reduces the speed at which estimates that can.

Michael J. Funk: Can be produced and then when you think that solutions like subrogation, where you might get in 200 page demand for inbound and our solution in matter of a minute or two can really give you a very fast and very precise response that increases the accuracy. So.

Githesh Ramamurthy: And then when you think that solutions like subrogation, where you might get a 200-page demand for inbound, and our solution, in a matter of a minute or two, can really give you a very fast and very precise response that increases accuracy. So every single solution we're developing has these characteristics in terms of efficiency, effectiveness, increasing the productivity of people, and a very specific ROI. And hence, you know, that's why we have focused on innovating across so many different solutions. Now, thank you for that, Gitesh. Maybe one more, Brian, if I could just quickly.

Michael J. Funk: Every single solution were developing.

Michael J. Funk: These characteristics in terms of efficiency the effectiveness, increasing the productivity of people.

Michael J. Funk: And a very specific ROI and hence that's why we.

Michael J. Funk: <unk> focused on innovating across so many different solutions.

Michael J. Funk: You've talked about the cloud infrastructure transition that you undertook moving from private to public. Any comment on how to think about that impacting operating leverage or margin as you've made that transition? Yeah, hey, Mike.

Speaker Change: Thank you for that cash maybe one more Brian if I could quickly.

Speaker Change: Talked about the cloud infrastructure transition that you're undertaking from private to public.

Brian: Any comment on how to think about that impacting operating leverage or margin you've made that transition.

Brian Herb: Um, yeah, we have fully transitioned. So we are on the new infrastructure serving clients and deploying solutions through that. We do still have some legacy cloud environments that we are winding down, and we'll be doing that over time. And so when we talk about the IT hosting cost, being up in the quarter part of that is just the growth of the business and building out against the pipeline and innovation.

Brian: Yeah, Hey, Mike.

Mike: Yes, we have fully transitioned so we are on the new infrastructure on serving clients and Deplaned solutions through that.

Mike: We do still have some legacy cloud environment that we are winding down and we will be doing that over time and so we talk about.

Mike: Hosting costs being up in the quarter part of that is the growth of the business and building out against the pipeline and innovation and then part of it is the decommissioning of the legacy platform environment that will wind down as we go forward overall, we're still really happy.

Brian Herb: And then part of it is the decommissioning of the legacy platform environment that will wind down as we go forward. Overall, we're still really happy with the margin progression; we had about 240 basis points of margin progression quarter over quarter or year over year. So again, within that, we feel like we're in a really good spot within our cost base. Great, thank you both.

Mike: With the margin progression, we added about 240 basis points of margin.

Mike: Progression quarter over quarter or year over year. So again within that we feel like we're in a really good spot within our cost base.

Speaker Change: Great. Thank you both.

Speaker Change: Thank you.

Michael J. Funk: Thank you. Thank you for your question. One moment for the next question. And our next question is coming from Tyler Radke of City. Your line is open. Hey, good afternoon.

Speaker Change: Thank you for your question one moment for the next question is.

Speaker Change: And our next question is coming from Tyler Radke of Citi. Your line is open.

Operator: Thanks for taking the question. I wanted to ask you, Githesh, about the new event-driven architecture you referenced during the call. I'm sure we'll hear a lot more about that at the conference here in a couple of weeks, but can you just talk about the theoretical future use cases and what you're doing from a back-end technology perspective to enable that? If there's an opportunity for monetization, either price increases or new SKUs with this new architecture, sure, Tyler.

Tyler Maverick Radke: Hey, good afternoon. Thanks for taking the question what are the that's easy to test about.

Tyler Maverick Radke: The new event.

Tyler Maverick Radke: Event, driven architecture, you referenced on the call I'm sure, we'll hear a lot more about that out at the conference here.

Tyler Maverick Radke: And a couple of weeks, but can you just talk about the.

Tyler Maverick Radke: <unk>.

Tyler Maverick Radke: No radical future use cases, what youre doing from a back end.

Tyler Maverick Radke: Technology perspective to enable that.

Tyler Maverick Radke: The opportunity for monetization either price increases or new Skus with this new architecture.

Speaker Change: Sure Tyler happy to take that question so.

Tyler Maverick Radke: Happy to take that question. So, what we have done over the years, as you know, we have been running a multi-tenant cloud platform for many years. And one of the key things that we see in terms of giving our customers a step up in performance is really taking events and decisions that are taking place across the network. What do I mean by that? That means you might have a repair at a repair facility that is not actually a repair but might turn out to be a total loss. Or you might have some other decision on the medical front.

Speaker Change: What we have done over the years as you know we have been running a multi tenant cloud platform for many years.

Speaker Change: And one of the key things that we see in terms of.

Speaker Change: Getting our costs, giving our customers a step up in performance is really taking events and decisions that are taking place across the network. What do I mean by that that means you might have a a repair at a repair facility that is not actually a repair but might turn out to be a total.

Speaker Change: Loss you might have some other decision.

Speaker Change: On the medical front, you might have a consumer who changed his or her mind about something that needs to be reflected downstream.

Githesh Ramamurthy: You might have a consumer who changed his or her mind about something that needs to be reflected downstream. So many of these decisions and events would take a lot of time to move from one place to the other. And what we have developed is an event-based architecture that really very quickly moves events from one place to the other, maximizing essentially the overall performance of the claim. Because there are literally hundreds of decisions that have to be made in every claim. And the permutations can be intense.

Speaker Change: Many of these decisions and events would take a lot of time to move from one place to the other.

Speaker Change: And what we have developed is an event based architecture that debt.

Speaker Change: That really very quickly moves events from one place to the other maximizing essentially the overall performance of the claim because there are literally hundreds of decisions that have to be made in every claim and the permutations can be intense and the data that's needed.

Speaker Change: It can be pretty intense and what we're seeing with our AI, which is which has been delivered in line with existing workflows is the combination of AI and this event during architecture, we think as a major way to really deliver.

Githesh Ramamurthy: And the data that's needed can be pretty intense. And what we're seeing with our AI, which has been delivered in line with existing workflows, is the combination of AI and this event-driven architecture, which we think, is a major way to really deliver more functionality and capability. And this platform, which we call the CCCIX Cloud, is an overlay on our existing architecture, so customers will get it automatically. It's already included, so there's no upgrade path.

Speaker Change: More functionality and capability.

Speaker Change: And this platform, which we call the CCC IX cloud is an overlay on our existing architecture.

Speaker Change: So customers will get it automatically it's already included there is no. There is no upgrade path. It works everything works without disrupting what they have and works in line, but what it really does is gives us the ability to deliver many many more innovations across.

Githesh Ramamurthy: It works. Everything works without disrupting what they have and works in line. But what it really does is gives us the ability to deliver many, many more innovations across the entire supply chain with those solutions having very unique and specific ROIs. And those solutions will be deployed by customers, and they'll have their own unique ROI and pricing, but not for this architect. Very helpful.

Speaker Change: The entire supply across the entire supply chain.

Speaker Change: With those solutions, having very unique and specific rois and those will be those solutions will be deployed by customers and they'll have their own unique ROI in pricing.

Speaker Change: But not for this architecture.

Tyler Maverick Radke: If I could ask a question, follow up for you, Brian. So just on the emerging solutions contribution, you know, the one point this quarter sounds like two points for the full year. I guess the path to get there, should we think about an exit rate of three points or something above two? Or is the way to think about it is that it ramps up to two points by Q4? Thank you. Yeah, it's Hey Tyler.

Speaker Change: Very helpful.

Speaker Change: If I could ask a question.

Speaker Change: Follow up for you, Brian So just on the emerging solutions contribution.

Speaker Change: The one point this quarter it sounds like two points for the full year I guess the path to get there should we think about an exit rate of three point or something above two or is the way to think about it as it ramps up to two points by Q4. Thank you.

Brian Herb: Yeah, as I said, we're going to continue to see the step up as we go through the year, and the contributions can be larger in the second half. What we're not specifically breaking down kind of exit run rate, I would just reiterate the two points for the full year we feel good about over time. We're expecting, and have talked about within the long-term guide, stepping up to three to four points. And we'll see that progress as we go from how we exit this year into 25 and beyond.

Speaker Change: Yes.

Speaker Change: Hey, Tyler.

Speaker Change: As I said, we're going to continue to see the step up as we go through the year and the contributions can be larger in the second half, we're not specifically breaking down kind of exit run rate I would just reiterate the two points for the full year, we feel good on overtime. We're.

Speaker Change: Dean and have talked about within the long term guide that stepping up to three to four points and we will see that progress as we go from here.

Speaker Change: How we exit this year into 25 and beyond.

Speaker Change: We're not going to give more specific than that at this stage. It Tyler there's just one more thing I'd add to what Brian said.

Brian Herb: So we're not going to get more specific than that at this stage. Hey, Tyler, there's just one more thing I'd add to what Brian said. You know, from my vantage point, all the revenue we deliver today was an emerging solution at one point or another, right? So when you think about it, you know, all of these solutions, in fact, they all have very long runways.

Tyler Maverick Radke: From my Vantage point all of the revenue would deliver today, where an emerging solution at one point or the other right. So when you think about it.

Tyler Maverick Radke: All of these solutions in fact, they all have very long runways, and what I get excited about is that.

Githesh Ramamurthy: And what I get excited about is that some of the solutions which were emerging at one point, 10 years later, 15 years later, they're still continuing to grow, and some some 25 years later, they're continuing to grow very nicely. So our focus often is on building and delivering those long-term solutions with long runways. And I just want to make sure that you know I add that piece as well.

Tyler Maverick Radke: Some of the solutions, which were emerging at one point 10 years later 15 years later, they're still continuing to grow in somewhat.

Tyler Maverick Radke: Five years later or continuing to grow very nicely. So our focus often is on building and delivering those long those solutions with long runways.

Tyler Maverick Radke: Just wanted to make sure that that piece as well.

Tyler Maverick Radke: Very helpful. Thank you. Thank you. One moment for our next question, and our next question is coming from Alexei. Gogolev of J.P. Morgan, your line is open. Hello, everyone.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thank you.

Speaker Change: One moment for our next questions.

Speaker Change: And our next question is coming from Alexi.

Speaker Change: Blaise.

Alexi: J P. Morgan your line is open.

Alexei Gogolev: Thank you for letting me ask a question. Githesh, I wanted to ask you about the payments you mentioned on today's call. Once again, the $100 billion in transactions on your platform. When do you expect to see a more pronounced tailwind to revenue growth from greater involvement in the payment? You know, the as, as you know, Alexei, good to hear from you. And as I've said before, the opportunities and the complexities of what our payment solutions can solve, we are seeing that every day with customers.

Alexi: Hello, everyone. Thank you for letting me ask a question we get asked.

Alexi: I wanted to ask you about payments you've mentioned on today's call once again.

Alexi: $100 billion in transactions on your platform when do you expect to see a more pronounced tailwind to revenue growth from greater enrollment in the payments world.

Alexi: No.

Alexi: As.

Speaker Change: And like I say, good to hear from you and as I've said before.

Speaker Change: The opportunities and the complexities of what our payment solution scan saw we are seeing that every day with customers. There's a lot of complexity. It is it will run we think at a slower pace compared to our other solutions for sure.

Alexei Gogolev: There's a lot of complexity. It will run, we think, at a slower pace compared to our other solutions, for sure. And we don't think, you know, I think towards the latter part of the year, we can hopefully give you more of an update on that.

Alexi: And we don't think.

Alexi: I think towards the latter part of the year, we can hopefully give you more of an update on that.

Githesh Ramamurthy: But we have continued to expand the capabilities of that solution and a broader set of problems our customers want us to solve. So we've been continuing to work on that. But that's where we are.

Alexi: But we have continued to expand the capabilities of that solutions and a broader set of problems our customers want us to solve so we've been continuing to work on that but that's where we are.

Alexei Gogolev: Thank you, Githesh, and Brian. Could I ask you to elaborate a bit more on the sequential increase in stock-based compensation in the quarter? Yeah, absolutely. So yes, stock-based comp did go up in the quarter versus where it's been trending more recently. Q1 is the high watermark for the quarter as a percent of revenue, but we do expect it to step down and move down as we go through the year. As we get into 2025, it will look like a more normalized rate and be more like 12 to 14. percent of revenue. That's what we expect it to run from 25 going forward.

Speaker Change: Thank you good question.

Brian: Brian could.

Brian: Could I ask you to elaborate a bit more.

Brian: On the sequential increase in stock based compensation in the quarter.

Brian: Yeah, absolutely. So yes stock based comp did go up in the quarter versus where it's been trending more recently.

Brian: Q1 is the what.

Alexi: We expect to be the high watermark.

Alexi: For the quarter as a percent of revenue, we do expect it to step.

Alexi: Stepped down and move down as we go through the year as we get into 2025. It will look like a more normalized rate and be more like 12% to 14% of revenue.

Alexi: That's what we expect kind of running from 25 going forward. So we do expect.

Alexi: Step up that we saw in Q1 to moderate and to normalize when we get into next year.

Speaker Change: Perfect. Thank you Brian.

Brian Herb: So we do expect the step-up that we saw in Q1 to moderate and to normalize when we get into next year. Thank you, Brian. Thank you. One moment for the next question. And our next question will be coming from Josh Baer of Morgan Stanley. Your line is open. Thanks, and congratulations on a strong quarter. Another question on the growth algorithm.

Brian: Thank you and we'll move to the next question is.

Brian: And our next question will be coming from Josh Baer.

Joshua Phillip Baer: Of Morgan Stanley Your line is open.

Joshua Phillip Baer: You know, Emerging Solutions' increasing contribution is definitely exciting. It's a clear positive. I think it's a key to the durability of growth.

Joshua Phillip Baer: Thanks, and congrats on a strong quarter. Another question on the growth algorithm.

Joshua Phillip Baer: Emerging solutions, increasing contribution is definitely exciting it's a clear positive I think.

Joshua Phillip Baer: A key to the durability of growth. The question is on the rest of the parts of the growth algorithm is emerging solutions was a one point contribution on 11% overall growth this quarter going to two points on 9% total thats several points of growth coming away. So just.

Joshua Phillip Baer: Where where is that coming from.

Joshua Phillip Baer: And why wouldn't the growth.

Joshua Phillip Baer: In logos or establish solutions be more durable.

Brian Herb: The questions on the rest of the parts of the growth algorithm: if Emerging Solutions was a one-point contribution to 11% overall growth this quarter, going to two points on 9% total, that's, would Logos or Established Solutions be more durable? Yeah, absolutely. Um, so the way maybe we started the long-term guide, then we can walk backwards. Because the way we framed the long term, so we talked about seven to 10, organic revenue growth over time. We say 80% of that will be from existing clients with cross-sell and upsell, and 20% from new logos.

Speaker Change: Yes, absolutely.

Joshua Phillip Baer: So the way maybe we start at the long term guide then we can work backwards because the way we frame the long term. So we took about 7% to 10 organic revenue growth over time.

Joshua Phillip Baer: We say, 80% of that will be from existing clients with cross sell upsell and 20% from new logo.

Joshua Phillip Baer: That's where we set the expectation is we're moving towards.

Brian Herb: So that's where we set the expectation as we're moving towards where we are today, as you highlighted, we're seeing about 30% growth from new logos. And then out of the remaining growth from cross sell upsell, you know, high percentages from established, over time, we just expect the emerging to become more of a larger part of the equation going forward. So it's more of a glide path, and it is a hard cut over, but how we see it playing out over time. Okay, I guess another way to put it more positively spin it if, if new logo growth or established solutions held in a bit more durable over the next few quarters, and you had confidence in the step up and emerging solutions, you know, that would be upside for the full year. Does that make sense? Yeah, it does.

Joshua Phillip Baer: Where we are today as you highlighted we're seeing about 30% growth from new logo.

Joshua Phillip Baer: And then out of the remaining growth from cross sell up sell high percentages from established overtime. We just expect the emerging to become more to be a larger part of the equation going forward.

Joshua Phillip Baer: So it's more of a glide path and it is a hard cutover.

Joshua Phillip Baer: How we see it playing out over time.

Speaker Change: Okay, I guess another another way to put it more on a more positive spin if.

Speaker Change: New logo growth or established solutions held in a bit more durable over the next few quarters and you have confidence in the step up in emerging solutions that would be upside for the full year does that makes sense.

Joshua Phillip Baer: I mean, we're always looking to deliver against the guide or outperform the guy that we have in the market. So, you know, we're pushing on all sides of it, you know, driving hard at the core and the established solutions, driving hard at new logos and continuing to remain strong and then building out the, you know, getting the momentum behind the emerging. So, you know, we're driving all three of those. So yeah, that's a good way of framing it.

Speaker Change: Yes. It does I mean, we're always looking to deliver against the guide or outperformed the guy that we have in the market. So we're pushing on all sides of it driving hard at the core and the established solutions driving hard at new logos and continuing to remain strong and then building out getting the momentum behind the emerging so.

Joshua Phillip Baer: We're driving all three of those so yes, that's a good way of framing it.

Speaker Change: Great. Thank you.

Joshua Phillip Baer: Yes.

Brian Herb: Great, thank you. Yes. Thank you for your question. One moment, please, for the next question. And our next question will be coming from Dylan Becker of William Blair. Your line is open. Hi guys, it's Faith on for Dylan.

Speaker Change: Thank you for your question one moment. Please for the next question.

Speaker Change: And our next question will be coming from Dylan Becker.

Dylan Tyler Becker: William Blair Your line is open.

Speaker Change: Hi, guys its Steve on for Dylan, if I could start with my first question being a more high level industry trend that we're seeing so as you continue to see premiums increase we're also seeing an uptick in issuance Brooke drivers either uninsured or underinsured. How is this playing into the overall level of complexity in that.

Dylan Tyler Becker: If I could start with my first question being a more high-level industry trend that we're seeing. So, as we continue to see premiums increase, we're also seeing an uptick in issues with drivers either being uninsured or underinsured. How is this playing into the overall level of complexity in the claims ecosystem? And how are you seeing the different stakeholders react to this? Sure, you know, a couple of things. We are seeing some variation state by state as well in that mix.

Speaker Change: And how you're seeing the different stakeholders react to that.

Speaker Change: Sure.

Speaker Change: A couple of things.

Speaker Change: We are seeing some variation state by state as well in that mix.

Githesh Ramamurthy: So customers are noticing and have started to deal with that, both at first notice of loss and also in terms of how that makes its way into medical claims and a variety of other places. And it's not had a material change on, you know, what our customers really pay for is what is frequency times cost of claim. So it hasn't impacted that number for our customers. But it has, like you pointed out, increased the complexity and, essentially, in something like subrogation, how they recover those dollars. That is really where we're seeing some specific differences in how you recover dollars, especially when your policyholder is not at fault, and that's where we're seeing more complexity. Okay, cool. That's a helpful color.

Speaker Change: So custom.

Speaker Change: Customers are.

Speaker Change: Are noticing and start have started to deal with that at both at first notice of loss and also in terms of how that makes its way into medical claims.

Speaker Change: And a variety of other places.

Speaker Change: It has not had a material change on.

Speaker Change: What our customers really pay for is the.

Speaker Change: As frequency times cost of claim so it hasnt impacted that number for our customers, but it has like you pointed out <unk>.

Speaker Change: Increased.

Speaker Change: The complexity and essentially in something like subrogation, how they recover those dollars.

Speaker Change: That is really where we're seeing some specific differences and how you recover.

Speaker Change: Especially when Youre policyholders not at fault.

Speaker Change: And that's where we're seeing more complexity.

Dylan Tyler Becker: And then for my second question, throughout the call, there's been a lot of talk about the different AI advancements between inbound subrogation and the IX cloud. How are these all fitting together to kind of drive those better outcomes for the ecosystem? And what's really ahead on the AI roadmap as more stakeholders get more comfortable with this technology and look to adapt it? Yes, the short answer is yes.

Speaker Change: Okay Cool that's helpful color and then for my second question throughout the call Theres been a lot of talk about the different AI advancements between inbound subrogation then the IX cloud.

Speaker Change: How are these all sitting together.

Speaker Change: Better outcomes for the ecosystem and what's really ahead on the AI roadmap is more stakeholders are getting more comfortable with this technology and look to adapt it.

Githesh Ramamurthy: You know, we have... We've had the benefit of taking this industry from books, paper, and pencil to write collision estimates to laptop computers to CD-ROMs to artificial intelligence. And so we've kind of continued to work closely with our customers. And if you look at, for example, adoption by various segments of our customer base, obviously, our OEM customers have very sophisticated needs and understanding. Our repair facility customers, I think I just said that we had over 5,000 of our repair facility customers adopt and use JumpStart, which really allows them to take pictures, write an estimate in seconds, and then augment that.

Speaker Change: Yes, the short answer is yes.

Speaker Change: We have.

Speaker Change: We have taken we have had the benefit of taking this industry from.

Speaker Change: Books paper and pencil to write collision estimates to laptop computers to CD Roms do artificial intelligence and so we've kind of continued to work closely with our customers.

Speaker Change: And if you look at for example adoption by various segments of our customer base, obviously, our OEM customers.

Speaker Change: Sophisticated needs and understanding a repair facility customers I think we just said that we had over 5000 of a repair facility customers adopt and use jumpstart, which really allows them to take pictures write an estimate in seconds and then augment that.

Githesh Ramamurthy: So we are starting to get a comfort level from the repair facilities. And obviously, for the last two to three years, we've had these solutions deployed with insurance companies, and we are seeing customers very carefully and thoughtfully continue to adopt them. And this is where transparency becomes really important, and traceability of how those algorithms came about. All those things are really important.

Speaker Change: So we are starting to get a comfort level from the repair facilities.

Speaker Change: And obviously for the last two three years, we've had these solutions deployed with insurance companies and we are seeing customers very carefully and thoughtfully continue to adopt.

Speaker Change: And this is where transparency becomes really important traceability of how those algorithms came about all those things are really important and the accuracy of what we can deliver also becomes extraordinarily important.

Githesh Ramamurthy: And the accuracy of what we can deliver also becomes extraordinarily important. So that comfort and confidence we can give to our customers that when we produce something, we also produce a confidence interval about how confident we are about an answer that then people are using to make those decisions. So the short answer is, yes, overall, we continue to see very strong. All right, awesome. That's it, guys. Thank you.

Speaker Change: That comfort and confidence we can give to our customers that wouldn't be produce something we also produce a confidence interval about how confident we are about and answer that then there.

Speaker Change: People are using to make those decisions on.

Speaker Change: So the short answer is yes overall, we're continuing to see very strong interest.

Speaker Change: Alright awesome, that's it guys.

Operator: One moment for the next question, and our next question will be coming from Gary. Shlomo Rosenbaum, Arvind Ramnani, Tyler Radke, Gary Prestopino, Shlomo Rosenbaum, Arvind, Thank you, Githesh. Bye, Brian.

Speaker Change: Thank you. The next question is.

Speaker Change: And our next question will be coming from Gary.

Gary: Our P&L Barrington Research your line is open.

Gary: Hey, good.

Gary: Hi, Brian.

Gary Frank Prestopino: Hey Gary, a couple of questions. With the introduction of inbound subrogation, did that automatically attach to entities that were using outbound subrogation, or is that sold a la carte, you know, inbound and outbound sold a la carte? Hey Gary, the short answer is... Yes, it can be adopted individually.

Gary: Hey, Gary a couple a couple of questions.

Gary: With the introduction of the inbound subrogation.

Gary: Automatically attach to entities that were using the outbound subrogation or.

Speaker Change: Is that sold Ala carte.

Speaker Change: Inbound and outbound sold Elkhart.

Speaker Change: Hi.

Speaker Change: Hey, Gary the short answer is yes.

Gary: Yes, it can be adopted individually. So we have customers that have chosen to adopt both inbound and outbound at the same time, we have customers that started out starting out with outbound.

Githesh Ramamurthy: So we have customers that have chosen to adopt both inbound and outbound at the same time. We have customers that started out, starting out with outbound. And so it can work any way. And that's generally how all our solutions work. You can adopt, you know, any components because it works seamlessly with all the other components.

Gary: And.

Gary: So it can work.

Gary: Anyway.

Gary: And that's generally how all our solutions, where you can adopt.

Gary: Any components because it works seamlessly with all the other components.

Gary Frank Prestopino: Are you finding that the ones that we're using outbound are, you know, more rapidly adopting inbound to have that end-to-end solution? It's actually more the other way around; we are seeing much more interest in inbound because of the complexity. And then many of those customers are choosing to also, you know, saying, hey, once you get this rolled out, we want to move to your outbound solutions. Some are actually starting with both.

Speaker Change: Are you finding that the ones that were using outbound are.

Speaker Change: Are rapidly adopting inbound to to have that end to end solution.

Speaker Change: It's actually more the other way around we are seeing much more.

Speaker Change: Interest in inbound because of the complexity and then many of those customers choosing to also.

Speaker Change: Saying, hey, once we get this rolled out we want to move to your outbound solutions some are actually starting with both.

Githesh Ramamurthy: And then just one question on this cloud IX, we're talking about taking events and decisions across the network to improve claims processing. Does that also apply to if there was a dispute about who was at fault in an accident? Can this product help with that since you've got a whole data set of various accidents that show who was at fault if fault was determined?

Speaker Change: And then just one question on this cloud IX when Youre talking about taking events and decisions across the network to improve claims processing does that would that also applicable to if there was a dispute that who is at fault.

Speaker Change: And then Ken can this product help with that since you got all hold data set of various accident.

Speaker Change: The show who is at fault.

Speaker Change: Bolt was determined.

Gary Frank Prestopino: Yeah, those are things that we'll probably come up with, because what you're fundamentally talking about is liability determination. So, when you think about liability determination, there are a number of factors that actually come in. For example, we have intersection data, we have weather data. You know, was someone taking a left turn?

Ken: Yes, those are things that will probably come up with because what you're fundamentally talking about his liability termination. So when you think about liability and termination there are a number of factors that actually come in for example, we have intersection data we have weather data.

Ken: What someone taking a left turn who had the right of way when a certain accident took place. We also have some pieces that can do accident reconstruction. So these are all capabilities that we can introduce and the power of the IX cloud is to put all of these pieces together in a seamless.

Githesh Ramamurthy: You know, who had the right-of-way when a certain accident took place? We also have some pieces that can do accident reconstruction. So, these are all capabilities that we can introduce. And the power of the IX Cloud is to put all of these pieces together in a seamless, easy-to-absorb manner so that at an individual claim level, you can get optimum performance. Thank you.

Ken: This easy to absorb manner.

Ken: So that had an individual claim level you can get optimum performance.

Ken: Okay.

Speaker Change: Thank you.

Gary Frank Prestopino: Thank you for your question. One moment for the next question. Our next question will be coming from Samad Samana of Jeffries. Your line is open. Hey, guys, thanks for taking my question. This is Jeremy on First Cod.

Speaker Change: Thank you for your question one moment for the next question.

Smart: Our next question will be coming from smart.

Smart: <unk> of Jefferies. Your line is open.

Samad Saleem Samana: A lot of my questions have already been asked, but maybe one more quick one on emerging products. So in order to achieve that three to four points of growth in the longer term, I guess, what percent of the client base you see is likely having to adopt these products? I guess what's the penetration that you need there?

Speaker Change: Hey, guys. Thanks for taking my question. This is Jeremy on for Scott a lot of my questions have already been asked maybe one more quick one on emerging products.

Jeremy: Order to achieve that three to four points of growth in the longer term I guess what percent of the client base do you see as likely having to adopt these products I guess, what's the penetration that you need there and what's that terminal penetration.

Brian Herb: And what's that terminal penetration? Yeah, hey, good question. Yeah, I mean, we look at it as a deployment of the solutions across the existing base. So, you know, when we think about kind of where we are with the ecosystem and all the participants of the ecosystem, many of them have the established solution. So we just see them stepping up the penetration across the emerging.

Jeremy: Yes.

Speaker Change: Good question, Yes, I mean, we look at it as a deployment of the solutions across the existing base.

Speaker Change: When we think about kind of where we are with the ecosystem and all of the participants of the ecosystem.

Speaker Change: Many of them have the established solutions. So we just see that.

Speaker Change: Then stepping up the penetration across the emerging so.

Samad Saleem Samana: So we're not kind of calling out a percent of our existing clients to convert them. It's more that as they step into the adoption, that it will ramp up over time. Gotcha, that's helpful. And then maybe a quick one.

Speaker Change: So we're not calling out a percent of our existing clients to convert its more that as they step into the adoption then it will ramp up over time.

Brian Herb: You mentioned you began rolling out the new top 20 APD insurance client that you announced last year. I guess you could maybe remind us what a rollout like this look like? And when do you expect a full revenue contribution from this insurer? Yeah, absolutely.

Speaker Change: Got you that's helpful. And then maybe quick ones. You mentioned you began rolling out the new top 20, Apd insurance client that you announced last year I guess can you remind us what does the rollout like this look like and when do you expect a full revenue contribution from <unk>.

Samad Saleem Samana: It will start to fully contribute in the second half of the year. It will start to play into the Q2 numbers, but it will not be fully rolled out. So it will partially come into Q2 and then fully roll out in the second half. We have just started. Gotcha. That's a useful color.

Speaker Change: Yes, absolutely it will start to fully contribute in the second half of the year It will start.

Speaker Change: To play into the Q2 numbers, but not fully rolled out so it will it will partially come into Q2, and then fully rollout in the second half we just started.

Brian Herb: Thanks for taking my questions, guys. Yeah, absolutely. Thank you for your question. One moment for the next question. The next question is coming from Kirk. All right, this is still on for... Unknown Attendee Hi, this is Phil. I'm on behalf of Kirk, and thanks for taking my question.

Gotcha, that's useful color. Thanks for taking my questions guys.

Speaker Change: Yes, absolutely.

Speaker Change: For your question one moment to the next questions.

The next question is coming from Kirk.

Kirk: Match ours.

Kirk: Hi, This is bill.

Bill Davidson: Your line is that this is bill on for Kirk and Thanks for taking my question on the auto insurance has been up recently based on inflation.

Operator: Auto insurance has been going up recently based on inflation. You know, with that in mind, how are companies thinking about IT spend in your industry? In fact, you know, I was just talking to a customer in my office just today.

Bill Davidson: With that in mind, how our company is thinking about it spend in your industry.

Bill Davidson: Okay.

Kirk Materne: And what they are looking for is, you know, any solutions that can give them rapid ROI. So people are very open to more solutions. They're not looking at this as, should I increase my IT spend or should I decrease my IT spend? What people are saying is, "Solutions that I can deploy easily that give me ROI. I am ready to put that in place."

In fact.

Bill Davidson: I was just talking to a customer in my office just today.

Bill Davidson: And what they're looking for is.

Bill Davidson: Any solutions that can give them rapid ROI. So people are very open to more solutions, they're not looking at this as trying to increase my spend or should have decreased by 80 spend what people are saying is solutions that I can deploy easily that give me ROI.

Bill Davidson: I am ready to put that in place and the last two years have shown that people need to be competitive.

Speaker Change: Great. Thanks.

Githesh Ramamurthy: And the last two years have shown that, you know, people need to be competitive. Great, thanks. Thank you for your question. The next question. We'll be coming from Chris Moore of CJ Securities. Your line is open. Hey, good afternoon, guys. Thanks for taking the question. Most might be an answer. But obviously, you know, given the conversation you started with about the investment, you're making an IX cloud, you know, and across the board, R&D was, you know, higher than normal, close to 22% this quarter, almost 50 million, just trying to understand if this is kind of the new normal level moving forward, or, you know, kind of how we should think about that at this stage, which might include stock. Yeah, it does, So it's Brian.

Speaker Change: Thank you for your question the next question.

Speaker Change: Yeah.

Christopher Paul Moore: Yeah, you have to look at it kind of in excluding stock comp. So that will be the biggest driver. If you exclude stock comp, you know, there it does continue to grow, but it's pretty moderate.

Speaker Change: We will be coming from Chris Moore.

Christopher Paul Moore: I see.

Christopher Paul Moore: P J Securities Your line is open.

Christopher Paul Moore: Hey, good afternoon, guys. Thanks for taking my question most of my answer but.

Speaker Change: Obviously, given the conversation started with on on the investment you're making in IX cloud.

Speaker Change: And across the board R&D was higher than normal close to 22% this quarter almost $50 million just trying to understand if this is kind of.

Speaker Change: The new normal level moving forward or.

Speaker Change: Kind of how we should think about that at this stage.

Brian Herb: We talked about in the past that we have, you know, taken a meaningful step up in capacity that's built into the system. And we feel like that capacity is what we need to drive innovation going forward. And so we're comfortable that R&D will continue to grow, but grow at a reasonable pace and continue to drive leverage across the business. And we're very comfortable with the margin progression that we're talking about for the full year. And we're comfortable about the margin progression to our targets of getting to the mid 40s over time. You got it.

Speaker Change: It might include stock, yes, it does Chris it's Bryan.

Bryan: You have to look at it kind of in a excluding the stock comps so that that will be the biggest driver if you exclude stock comp.

Speaker Change: There it does continue to grow.

Speaker Change: It's pretty moderate we talked about in the past that we.

Speaker Change: Ted.

Speaker Change: Meaningful step up in capacity that <unk> built into the system and we feel like that capacity is what we need to drive innovation going forward and so we're comfortable that R&D will continue to grow.

Speaker Change: But grow at a reasonable pace and continue to drive leverage across the business and we're very comfortable on the margin progression that we're talking about for the full year and we're comfortable about the margin progression.

Speaker Change: Two our targets of getting into the mid <unk> over time.

Christopher Paul Moore: I appreciate it. I'll leave it there. Thanks, Chris. Thank you. One moment for the next question. Our next question will be coming from Gabriela Borges of Goldman Sachs. Your line is open. Hi, good afternoon.

Speaker Change: Got it I appreciate it I'll leave it there.

Speaker Change: Thanks, Chris.

Speaker Change: One moment for the next question.

Speaker Change: Our next question will be coming from gambro yellow.

Speaker Change: Yes.

Speaker Change: Oldman Sachs. Your line is open.

Gabriela Borges: Thank you. Brian, I wanted to ask the new logo question in a couple of different ways. The first part is around the success that you're having in the repair shop community. Remind us how to think about penetration there and what the limiting factor is to the number of new logos that you can get in any given year within that ecosystem, given there is a little bit of a network effect as you rank. Yeah, hey, Gabriela.

gambro yellow: Hi, good afternoon. Thank you.

gambro yellow: Brian.

And Ian level question in a couple of different ways.

Speaker Change: First part is around the success that you're having and the repair shop community remind us how to think of that penetration.

Speaker Change: The limiting factor.

Speaker Change: Brian.

Speaker Change: You can get.

Speaker Change: Kevin you are within that ecosystem.

Speaker Change: One last little back of network effects.

Brian Herb: So the way we look at the shop network is about 40,000 repair shops that are a kind of marketplace. Today, we have 29,500. We've been adding, if you look back over the past several years, about 1000 net new logos a year. And we continue to see that pacing and are very comfortable with that pacing for the year and in the near term. So really good momentum; we continue to see strength in new logo adoption at the shop. That's helpful.

Kevin: Yeah, Hey, Gabriel to the way, we look at the shop network.

Kevin: Is about 40000 repair shops that are is kind of the marketplace. Today. We have 29500, we've been adding if you look back over the past several years about a 1000 net new logos a year.

Kevin: And we continue to see that pacing and very comfortable with that pacing for.

Kevin: For the year and in the near term so really good momentum continuing to see strength.

Kevin: And new logo adoption.

Kevin: At the shops.

Gabriela Borges: And the second part of the New Logo question is, in the past, when you've talked about expanding overseas, it's been with a lens towards M&A. So my question to you is, what is the limiting factor to expanding New Logos overseas organically? And maybe give us an update as to when you think the timing might be right to become more aggressive with M&A and expanding internationally? Thank you. Hey, Gabriela, this is Gitesh.

Speaker Change: That's helpful and then the second part of it being like a question.

Speaker Change: In the past when you've talked about expanding the scene.

Theme with all lends towards M&A.

Speaker Change: A question to yearend wonderful cutting sacs option expanding.

Speaker Change: These are organically and maybe you can give us some update.

Speaker Change: Are you asking why do you think the timing might be right pull become more aggressive with M&A and expanding internationally. Thank you.

Githesh Ramamurthy: I just say that, you know, our first priority when we look at M&A is domestic, and that is to look at the opportunities we have in expanding our product set. For example, with subrogation, if you remember, it's been almost about two years now. And that was a great example where we took a fantastic team and then really built it out.

Speaker Change: Hey, Gary I'll, let us to <unk> I'd, just say that.

Speaker Change: Our first priority when we look at M&A.

Speaker Change: As the domestic.

Speaker Change: Is to look at the opportunities we have in expanding our product set for example, with subrogation, if youll remember a little over it's been almost about two years now.

Speaker Change: And that was a great example, where we took a fantastic team and then.

Githesh Ramamurthy: And, you know, those kinds of expansions we look at. On the international front, we are not at this stage that is that, you know, we continue to spend time looking at it, both in terms of Europe and China. We're already in China, as you know, but not a major focus right now, in terms of international. Unlisted.

Speaker Change: Really built that out and.

Speaker Change: <unk>.

Speaker Change: Those kinds of expansions, we look at on the international front, we are not.

Speaker Change: At this stage that is that we continue to spend time looking at it both in terms of Europe, we're already in China as you know.

Speaker Change: But not a not a major focus right now in terms of international.

Speaker Change: Thank you.

Gabriela Borges: Thank you. Thank you, everybody. Thank you for your question. There are no more questions in the queue, and I would like to turn the call over to Githesh for closing remarks. Please go ahead. Thank you all for joining us today. I'd just like to thank our customers, our CCC team members, and our shareholders for a great start to 24. And, as you hopefully saw, the durability of our business model continues to come through.

Speaker Change #100: Thanks Deborah.

Thank you.

Speaker Change #101: Thank you for your question there are no more questions in the queue I would like to turn the call over to <unk> for closing remarks. Please go ahead Sir.

Gabriela Borges: We remain confident in our ability to deliver on our strategic and financial objectives while helping our customers and investing in future solutions at the same time. We look forward to talking to you again in late July.

Speaker Change #102: Thank you all for joining us today I'd, just like to thank our customers our CCC team members and our shareholders.

Speaker Change #103: Great start to 2004.

Speaker Change #104: And as you hopefully saw the durability of our business model continues to come through we remain confident in our ability to deliver on our strategic and financial objectives, while helping our customers and investing in future solutions at the same time, we look forward to talking to you again in late July when we report our SEC.

Githesh Ramamurthy: We look forward to when we report our second quarter results, if not sooner. Again, thank you so much for your continued interest and your support of CCC. This does conclude today's conference call. Thank you for your participation. You may all disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day and thank you for standing by.

Speaker Change #104: Quarter results, if not sooner again. Thank you so much for your continued interest and your support of CCC.

Speaker Change #105: This does conclude today's conference call. Thank you for your participation you may all disconnect.

Speaker Change #105: Okay.

Speaker Change #105: [music].

Speaker Change #105: Okay.

Speaker Change #105: Yes.

Speaker Change #105: Yes.

Speaker Change #105: Sure.

Speaker Change #105: [music].

Speaker Change #105: Sure.

Speaker Change #105: Okay.

Speaker Change #105: Okay.

Speaker Change #105: [music].

Speaker Change #105: Okay.

Speaker Change #105: [music].

Yes.

Speaker Change #105: Okay.

Speaker Change #105: [music].

Speaker Change #105: [music].

Operator: Welcome to the CCC Intelligent Solutions first quarter fiscal 2021 earnings conference call. At this time, all participants are in a listen-only mode.

Good day and thank you for standing by welcome to the C. C C intelligent solutions first quarter fiscal 2020 for.

Speaker Change #105: Earnings Conference call.

Speaker Change #105: At this time all participants are in listen only mode. After the speaker's presentation there'll be a question and answer session.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising you to hold your hand. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Bill Warmington, Vice President of Investor Relations. Please go ahead.

Speaker Change #105: To ask a question during the session you will need to press star one on your telephone.

Speaker Change #105: We'll then hear an automated message and advising you had just raised to withdraw your question. Please press star one again please.

Speaker Change #105: Please be advised that today's conference is being recorded I would now like to hand.

Speaker Change #105: Where do your speaker for today, Bill Warmington, Vice President of Investor Relations. Please go ahead Sir.

William Arthur Warmington: Thank you, operator. Good afternoon, and thank you all for joining us today to review CCC's first quarter 2024 financial results, which we announced in the press release issued following the close of the market. 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.

William Arthur Warmington: Thank you operator, good afternoon, and thank you all for joining us today to review <unk> first quarter 2024 financial results, which we announced in the press release issued following the close of the market today.

William Arthur Warmington: Joining me on the call are detached retina, Murphy, <unk>, chairman and CEO and Brian heard CCC CFO.

William Arthur Warmington: These risks are discussed in the earnings releases available on our investor relations website under the heading Risk Factors in our 2023 Annual Report on Form 10-K filed with the SEC. Further, these comments and the Q&A that follows are copyrighted today by CCC Intelligence Solutions Holdings, 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.

William Arthur Warmington: 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 2020.

William Arthur Warmington: <unk> annual report on Form 10-K filed with the SEC.

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

William Arthur Warmington: Additionally, while we will provide a transcript of portions of this call, and we've approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in the 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.

William Arthur Warmington: Additionally, while we will 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 responsibility for in accuracies that may appear in the transcripts.

William Arthur Warmington: 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.

William Arthur Warmington: A reconciliation of GAAP to non-GAAP measures is available in our earnings release that is available on our Investor Relations website. Thank you and now I'll turn the call over to detach.

Githesh Ramamurthy: Thank you, Bill. And thanks to all of you for joining us today. I am pleased to report that CCC began 2024 on a strong note. In the first quarter of 2024, CCC's total revenue was $227 million, up 11% year-over-year and ahead of our guidance. Adjusted EBITDA was $94 million, also ahead of our guidance, and our adjusted EBITDA margin was 41%.

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

Detach: I am pleased to report that CCC began 2024 on a strong note.

Detach: In the first quarter of 2020 for Ccc's total revenue was $227 million.

Detach: Up 11% year over year and ahead of our guidance range.

Detach: Adjusted EBITDA was 94 million also ahead of our guidance range and our adjusted EBITDA margin was 41%.

Githesh Ramamurthy: Our industry continues to be in the early innings of digital transformation, and CCC is well positioned to be our customers' partner of choice for that transformation. On today's call, I'd like to share how the CCC Intelligent Experience Cloud is helping our customers navigate this journey and the growing adoption we are seeing across our recent innovations. I will also provide an update on the continued progress we have made in broadening our shareholder base. My first topic is the role of the CCC Intelligent Experience Cloud in enabling our customers' digital transformation. CCC was an early pioneer in SaaS and cloud computing with the initial launch of our cloud platform back in 2003.

Detach: Our industry continues to be in the early innings of digital transformation and CCC is well positioned to be our customers' partner of choice for that transformation.

On today's call I'd like to share how the CCC intelligent experience cloud is helping our customers navigate this journey and the growing adoption, we are seeing across our recent innovations.

Detach: I'll also provide an update on the continued progress we have made in broadening our shareholder base.

Detach: My first topic.

Detach: The role of the CCC intelligent experienced cloud and enabling our customers' digital transformation.

Detach: CCC was an early pioneer in SaaS and cloud computing with the initial launch of our cloud platform back in 2003.

Githesh Ramamurthy: Since then, we have continuously expanded and strengthened our capabilities, and today, our hyper-scaled, 100% multi-tenant platform connects more than 35,000 companies and processes well over $100 billion of commerce annually. This technology backbone powers a wide range of mission-critical applications for the customers we serve, insurers, collision repairers, auto manufacturers, parts suppliers, and more, and is a key enabler of our ability to provide continuous innovation to customers with a rapid return on investment and minimal effort on deployment. Our cloud platform is also highly efficient.

Since then we have continuously expanded and strengthened our capabilities and today, our hyperscale, 100% multi tenant platform connects more than 35000 companies and processes well over $100 billion of commerce annually.

Detach: This technology backbone powers, a wide range of mission critical applications for the customers, we serve insurers collision repairs auto manufacturers parts suppliers and more.

Detach: And is a key enabler.

Detach: Our ability to provide continuous innovation to customers with a rapid return on investment and minimal effort on deployment.

Our cloud platform is also highly efficient.

Githesh Ramamurthy: In 2023, our engineering teams deployed more than 1,400 releases to customers with high operating leverage, scalability, and reliability. Our transition from private to public cloud infrastructure last year further reinforced these advantages. Across the markets we serve, customers are increasingly looking to CCC to make it faster and easier to adopt our solutions and drive innovation into their business. This trend is being driven by a wide variety of forces, including macroeconomic changes, labor shortages, and increasing complexity in day-to-day operations, challenges that can best be addressed through a highly integrated, highly connected AI-enabled platform. And critically, they're looking to rapidly transform and simplify their businesses without disrupting their existing operations. Doing this at scale requires intelligent orchestration.

Detach: In 2023, our engineering teams deployed more than 1400 releases to customers with high operating leverage scalability and reliability.

Our transition from private to public cloud infrastructure last year further reinforce these advantages.

Detach: Across the markets, we serve customers are increasingly looking to CCC to make it faster and easier to adopt our solutions and drive innovation into the business.

Detach: This trend is being driven by a wide variety of forces, including macroeconomic changes labor shortages and increasing complexity in day to day operations.

Detach: <unk> that can best be addressed through a highly integrated highly connected AI enabled platform and.

Detach: Critically theyre looking to rapidly transform and simplify their businesses.

Detach: Without disrupting their existing operations doing this at scale requires intelligently orchestrating the data and workflows not just within a customer's four walls.

Githesh Ramamurthy: Data and workflows, not just within a customer's four walls but across the consumers and businesses they interact with. And with the recent introduction of the CCC Intelligent Experience Cloud, or IX Cloud for short. We are enhancing our customers' ability to solve this many-to-many problem with a cloud platform they already use every day. The CCC IX Cloud overlays a new event-driven architecture on top of CCC's existing cloud applications, customer workflows, and customer and partner systems.

Detach: Across the consumers and businesses interact with.

Detach: And with the recent introduction of the CCC intelligent experienced cloud.

Detach: IX cloud for sure.

Detach: We are enhancing our customers' ability to solve this many companion problem with our cloud platform. They already use every day.

Detach: The CCC IX cloud overlays, a new event driven architecture into ccc's existing cloud applications customer workflows and customer and partner systems. This.

Githesh Ramamurthy: This microservices-based approach will make it faster and easier for customers to deploy new CCC solutions and will also increase the number of ways customers can use multiple CCC solutions together. Customers do not need to upgrade as the CCC IX cloud represents an enhancement to their existing CCC cloud platform. It just gets better.

Detach: This micro services based approach will make it faster and easier for customers to deploy new CCC solutions and we will also increase the number of ways customers can use multiple CCC solutions together.

Detach: Customers do not need to upgrade as the CCC IX cloud represents an enhancement to the existing CCC cloud platform.

Just gets better.

Githesh Ramamurthy: Throughout our history, CCC has helped customers navigate the complexity of our industry and used advanced, highly connected technology to solve the most pressing business problems. The CCCIX plow is designed to accelerate this journey in a way that is purpose-built to solve for the substantial increase in complexity in the PNC insurance economy we see today. Unlike most industries, where an existing supply chain converts raw materials into finished products and distributes them in a predetermined and repeatable manner, in the PNC insurance economy, the supply chain is created spontaneously after an accident occurs. Each insurance claim and collision repair is unique.

Detach: Throughout our history CCC is help customers navigate the complexity of our industry and used advanced highly connected technology to solve the most pressing business problems.

<unk> cloud is designed to accelerate this journey in a way that is purpose built to solve for the substantial increase in complexity in the P&C insurance economy, we see today.

Detach: Unlike most industries, where an existing supply chain convert raw materials into finished products and distributes them in a predetermined and repeatable manner. Instead in the P&C insurance economy. The supply chain is created spontaneously.

Detach: After an accident occurs.

Detach: Each insurance claim and collision repair is unique and so ark the hundreds of different decisions.

Githesh Ramamurthy: And so are the hundreds of different decisions tasks and data flows that go into those claims and repair. These are crucial moments for our customers and their customers, and our new event-driven architecture helps to align this highly complex supply chain. So our customers can drive a step function improvement in their operating performance, and we are excited to see what they invent. My second topic is the growing adoption of our solution.

Detach: Yes.

Detach: And data flows that go into those claims and repairs.

Detach: As a crucial moments for our customers and their customers and our new event driven architecture helps to align this highly complex supply chain. So our customers can drive a step function improvement in their operating performance and consumer and employee experience.

We are excited to see what the impact.

Detach: My second topic is the growing adoption of our solutions.

Githesh Ramamurthy: Our solid performance in Q1 was driven by the continued expansion of our multi-sided network and traction from new and existing solutions. In addition, we began rolling out the new top 20 APD insurance client we announced last year and had multiple insurers renewing and expanding their relationships with CCC. We have also continued to add new repair facilities and parts suppliers to the CCC network.

Detach: Our solid performance in Q1 was driven by the continued expansion of our multi sided network and traction from new and existing solutions.

Detach: In addition, we began rolling out the new top 20, Apd insurance client, we announced last year and had multiple insurers renewing and expanding their relationships with CCC.

Detach: We have also continued to add new repair facilities and part suppliers to the CCC network.

Githesh Ramamurthy: We also saw strong demand and adoption of our AI-enabled solution across our different customers for Estimate STP for Exam. We continue to see progress across volume, adoption, and the number of clients testing, piloting, and rolling out. Other examples are CCC Segregation, a suite of solutions that applies AI and workflow automation to both outbound and inbound subrogation, as well as Impact Dynamics, which uses computer vision to predict potential injuries to the occupants of a vehicle involved in an accident based on photos of a damaged vehicle.

Detach: We also saw strong demand and adoption of our AI enabled solution across our different customer groups.

Detach: Estimate STP for example, we continue to see progress across volume.

Adoption and the number of clients testing piloting and rolling out.

Detach: Other examples are CCC subrogation, our suite of solutions that applies AI and workflow automation to both outbound and inbound subrogation.

Detach: As well as impact dynamics, which uses computer vision.

Detach: Predict potential injuries to the occupants of a vehicle involved in an accident based on photos of the damaged vehicle.

Githesh Ramamurthy: Both of these solutions continue to deliver significantly positive results for customers using them, often in the multiple millions of dollars, resulting in growing interest from more customers. We expect these positive demand and adoption trends to continue given the significant bottom line benefits insurers are seeing from these solutions, such as the Repair Facility. We are continuing to add new rooftops and are seeing strong adoption of new products like Mobile Jumpstart, the solution we launched at the end of 2023 that uses AI to dramatically reduce the time it takes an estimator at a repair facility to generate an initial estimate from an industry average of half an hour or more to less than two minutes. In Q1, almost 5,000 repair facilities used Mobile Jumpstart to complete tens of thousands of repairs.

Detach: Both of these solutions continued to deliver significantly positive results for customers using them.

Detach: Often in the multiple millions of dollars.

Detach: Resulting in growing interest from our customers.

We expect these positive demand and adoption trends to continue given the significant bottom line benefits insurers are seeing from these solutions.

Detach: For repair facilities, we're continuing to add new rooftops and are seeing strong adoption of new products like mobile jumpstart. The solution. We launched at the end of 2023 that uses AI to dramatically reduce the time it takes and estimated.

Detach: A repair facility to generate an initial estimate.

Detach: From an industry average of half an hour or more to less than two minutes.

Detach: In Q1, almost 5000 repair facilities used jumpstart to complete tens of thousands of repair estimates.

Githesh Ramamurthy: We're also continuing to see strong interest in the expansion of CCC One beyond its traditional focus on repair operations to help our customers run their businesses overall. Two examples of such solutions are Amplify, a quick and easy way for repair facilities to set up a modern, professional-looking website with deep integration into CCC One, and our consumer payment solution, which has already enabled over a billion dollars in partner payment collection for our repair facility customers.

Detach: We're also continuing to see strong interest in the expansion of CCC one beyond its traditional focus on repair operations to help our customers run their businesses overall.

Detach: Examples of such solutions, our amplify a quick and easy way for repair facilities to setup, a modern professional looking website with deep integration into CCC one.

Detach: In our consumer payment solution, which is already enabled over $1 billion in partner payment collections for aggregates. So the customers.

Githesh Ramamurthy: We feel good about the early traction and growth potential for both of these solutions and see many additional category expansion opportunities for repair facilities, given our platform, network, and AI capabilities. The progression of these and other new solutions follows a pattern of innovation that we have observed over multiple decades. Building a great product grounded in tangible customer value with a rapid ROI provides a long-term runway for growth and strong, referenceable customer relationships, which in turn leads to additional opportunities.

Detach: We feel good about the early traction and growth potential.

Detach: For both of these solutions and see many additional category expansion opportunity for repair facilities, given our platform network and AI capabilities.

Detach: The progression of these and other new solutions follows a pattern of innovation that we have observed over multiple decades.

Detach: Building, a great product grounded in tangible customer value.

Detach: With a rapid ROI provides a long term runway for growth and strong referenced <unk> customer relationships.

Detach: Which in turn leads to additional opportunities.

Githesh Ramamurthy: The credibility we established with our original product, a tool to help insurers assess total loss, provided a pathway for us to deploy a state-of-the-art solution estimating damage to repairable vehicles. We then extended those same estimated capabilities to repair facilities, establishing direct repair and the expansive insurer repair facility network that exists today. In the years since, a steady stream of industry-first innovation has extended our platform and delivered additional value to customers, workflow tools for insurers to manage the appraisal process, and Advanced Operating System for repair facilities to help them manage their day-to-day operations. Integrated Parts Ordering with Thousands of Connected Parts Supply, mobile, and then AI-based digital solutions that range from first notice of loss to appraisal to casualty and even subrogation and

Detach: The credibility, we established with our original product a tool to help insurers assess total losses provided a pathway for us to deploy a state of the art solution estimating damage through repeatable vehicles.

Detach: We then extended those same estimating capabilities to repair facilities.

Detach: Stablish ing direct repair and the expansive insurer repair facility network that exists today.

Detach: In the year.

Detach: A steady stream of industry first innovations.

Detach: As extended our platform and deliver additional value to customers.

Detach: Workflow tools for insurers to manage the appraisal process and advanced operating system for repair facilities to help them manage their degree operations integrated parks chaudhary with thousands of connected parts suppliers mobile and then AI based digital solutions that range from first notice of loss.

Githesh Ramamurthy: Our track record of delivering these and other innovations has, at its core, been enabled by the depth of our customer relationships with insurers, collision repairers, parts suppliers, and auto manufacturers. The result is an innovation flywheel that lets us incubate new concepts, test them with initial customization, and then deploy reference-level solutions at scale across our and because we have such a broad portfolio of innovations. Different customers can adopt different solutions, in different increments, based on their particular needs. This dynamic is at the heart of our durable long-term business model and enables us to consistently invest in R&D across economic cycles.

Detach: Phrasal to casualty and even subrogation and more our track record of delivering these and other innovations has at its core being enabled by the depth of our customer relationships with insurers collision repairs parts suppliers and auto manufacturers.

Detach: The result is an innovation flywheel that lets us incubate new concepts test them with initial customers and then deploy reference level solutions at scale across our customer base.

Detach: And because we have such a broad portfolio of innovation.

Detach: Different customers can adopt different solutions in different increments based on their particular needs over time.

Detach: This dynamic is at the heart of our durable long term business model and enables us to consistently invest in R&D across economic cycles.

Githesh Ramamurthy: $150 million last year and well over a billion dollars in the past decade, and with our projected 2024 revenue, representing a fraction of the $10 billion plus market opportunity we see in digitizing the PNC insurance economy.

Detach: $150 million last year, and well over $1 billion in the past decade.

Detach: And with our projected 2024 revenue representing a fraction of the $10 billion plus market opportunity, we see in digitizing. The P&C insurance economy. We believe we have decades of growth ahead of us.

Githesh Ramamurthy: We believe we have decades of growth ahead. My third and final topic is an update on the continued progress we have made in broadening our shareholder base and going public. We have made significant advances in expanding our shareholder base and increasing the liquidity of our, The Secondary Offerings and Block Trades from our Private Equity Investors. Over the past six months, I've increased our public float as a percent of total shares outstanding, as measured from Bloomberg, from about 30% in October of last year to about 60% currently.

Detach: My third and final topic is an update on the continued progress we have made in broadening our shareholder base.

Detach: Going public we have made significant advances in expanding our shareholder base and increasing the liquidity of our shares.

Detach: The secondary offerings and block trades from our private equity investors over the past six months.

Detach: Priest, our public float as a percent of total shares outstanding as measured from Bloomberg from about 30% in October of last year to about 60% currently.

Githesh Ramamurthy: We see this as an important development towards fulfilling our commitment to our shareholders. Let me conclude by saying that we are excited about what we have planned for 2024. The rising demand for AI-based solutions across our customer base, combined with our track record of driving growth through innovation and increasing the ease of adopting our solutions via the CCCIX cloud, gives us confidence in our ability to continue to deliver our strategic and financial objectives. I will now turn the call over to Brian, who will walk you through our results in more detail. Thanks, Githesh.

We see this as an important development towards fulfilling our commitment to our shareholders.

Detach: Let me conclude by saying that we are excited about what we have planned for 2020 for the rising demand for AI based solutions across our customer base combined with our track record of driving growth through innovation and increasing the ease of adopting our solutions.

Detach: By the CCC IX cloud gives us confidence 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 in more detail.

Brian Herb: As Githesh highlighted, we are seeing strong innovation and momentum across the business, as reflected in our track record of driving growth through category expansions and cross-selling. Our ix cloud architecture enables easier client adoption of our solutions and our durable business model. We are pleased with both top and bottom line performance, which will reflect a balance between investment in our growth initiatives and ongoing margin discipline. Now, as we turn to the numbers, I will review first quarter 2024 results and then provide guidance for the second quarter in full year 2024. Total revenue in the first quarter was $227.2 million, up 11% from the prior year period.

Brian: Thanks Kipp.

Brian: As <unk> highlighted we are seeing strong innovation and momentum across the business as reflected in our track record of driving growth through category expansion and cross selling our IX cloud architecture enables easier client adoption of our solutions and our durable business model. We are pleased with both top.

Brian Herb: Approximately 8 points of our growth in Q1 was driven by cross-sell, up-sell, and adoption of our solutions across our client base, including repair shop package upgrades, continued adoption of our digital solutions, and the ongoing strength in casualty employment. Additionally, approximately three points of growth came from our new logos, mostly with repair facilities and parts suppliers. About one point of growth in Q1 came from our emerging solutions, mainly diagnostics, estimate STP, and segregation. 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.

Brian: And Bottomline performance, which reflects a balance between investment in our growth initiatives and ongoing margin discipline now as we turn to the numbers I will review.

Brian Herb: In Q1 2024, our GDR was 99%, which is in line with last quarter. Note that since the first quarter of 2020, our GDR has been between 98 and 99% and is either rounded up or down, driven primarily by repair shop industry churn. We believe our strong 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 business. Software Net Dollar Retention, or NDR, captures the amount across on upsell from our existing customers compared to the prior year period, as well as volume movements in our auto physical damage client base.

Brian: <unk> first quarter 2024 results and then provide guidance for the second quarter and full year of 2024.

Brian: Total revenue in the first quarter was $227 2 million up 11% from the prior year period.

<unk> eight points of our growth in Q1 was driven by cross sell upsell and adoption 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 approximately three points of growth came from our new logos, mostly with repair.

Brian: <unk> and part suppliers.

Brian: About one point of growth in Q1 came from our emerging solutions, mainly diagnostics estimate STP and segregation.

Brian: 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 Q1, 2024, our GDR with 99%, which is in line with last quarter note that since the first quarter 2020, our GDR.

Brian: Has been between 98%, 99% and as either rounded up or down driven primarily by repair shop industry churn.

Brian: We believe our strong 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 to a predictable and resilient business model software net dollar retention or <unk> captures the amount of cross selling.

Brian: <unk> from our existing customers compared to the prior year period, as well as volume movements and our auto physical damage client base in Q1, 2024, or <unk> was 107 consistent with our average across 2023 now.

Brian Herb: In Q1 2024, our NDR was 107, consistent with our average across 2023. Now I'll review the income statement in more detail. As a reminder, unless otherwise noted, all metrics are non-GAAP. We provide a reconciliation of GAAP to non-GAAP metrics in our press release. Adjusted gross profit in the quarter was $177 million.

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

Brian Herb: Adjusted gross profit margin was 78%, down slightly from 79% in Q4 and up again to 76% in Q1 of 2023. The stronger year-over-year adjusted gross profit margin primarily reflects operating leverage on the incremental revenue. Overall, we feel good about the operating leverage and scalability of our 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 Q1 2024 was $92.9 million, which is up 8% year over year.

Brian: Adjusted gross profit in the quarter was $177 million adjusted gross profit margin was 78% down slightly from 79% in Q4 and up against 76% in Q1 of 2023, the stronger year over year adjusted gross profit margin, primarily reflects operating leverage on the incremental revenue.

Brian: Overall, we feel good about the operating leverage and scalability of our business model and our ability to deliver against our long term adjusted gross profit margin target of 80%.

Brian Herb: This was mainly driven by higher IT-related costs, as well as investment in our customer facing. Adjusted EBITDA for the quarter was $93.7 million, up 18% year-over-year, with an adjusted EBITDA margin of 41%. Now turning to the balance sheet and cash flows, we ended the quarter with $191 million in cash and cash equivalents, and $782 million of debt. At the end of the quarter, our net leverage was 1.6 times adjusted EBITDA. Free cash flow in Q1 was $39.6 million compared to $18.5 million in the prior year period.

Brian: In terms of expenses adjusted operating expense in Q1, 2024 was $92 9 million, which is up 8% year over year. This was mainly driven by higher it related cost as well as investment in our customer facing functions adjusted EBITDA for the quarter was $93 7 million.

Brian: Up 18% year over year with an adjusted EBITDA margin of 41%.

Brian: Now turning to the balance sheet and cash flows we ended the quarter with $191 million in cash and cash equivalents.

Brian: $782 million of debt at the end of the quarter. Our net leverage was one six times adjusted EBITDA free cash flow in Q1 was $39 6 million compared to $18 5 million in the prior year period free cash flow on a trailing 12 month basis was $216 million, which is up 56%.

Brian Herb: Free cash flow on a trailing 12-month basis was $216 million, which is up 56% year-over-year. Our trailing 12-month free cash flow margin in Q1 2024 was 24% compared to 17% a year ago. Unlevered free cash flow in Q1 was $52 million, or approximately 55% of our adjusted EBITDA.

Year over year, our trailing 12 month free cash flow margin in Q1, 2024 was 24% compared to 17% a year ago.

Brian: Unlevered free cash flow in Q1 was $52 million or approximately 55% of our adjusted EBITDA Q1 is usually our lowest conversion quarter because thats when we pay our annual incentives, while our level of free cash flow can vary quarter to quarter. We expect it to continue to average out in the mid 60% range of our <unk>.

Brian Herb: Q1 is usually our lowest conversion quarter because it's when we pay our annual one-time capital expenditure. While our level of free cash flow can vary quarter to quarter, we expect it to continue to average out in the mid 60% range of our adjusted EBITDA on an annual basis. I'll now cover guidance beginning in Q2 2024. We expect total revenue of $228.5 to $230.5 million, which represents 8 to 9% growth year-over-year. We expect adjusted EBITDA of $89 to $91 million, a 39% adjusted EBITDA margin at the midpoint.

Brian: Adjusted EBITDA on an annual basis.

Speaker Change #107: I will now now cover guidance beginning in Q2 2024, we expect total revenue of $228 $5 million to $235 million, which represents 8% to 9% growth year over year, we expect adjusted EBITDA of $89 million to $91 million, a 39% adjusted EBITDA margin at <unk>.

Speaker Change #107: Midpoint for the full year 2024, we expect revenue of $944 million to $950 million, which represents 9% to 10% year over year growth, we expect adjusted EBITDA of $389 million to $395 million, which represents 41% adjusted EBITDA margin at <unk>.

Brian Herb: For the full year 2024, we expect revenue of $944 to $950 million, which represents 9% to 10% year-over-year growth. We expect adjusted EBITDA of $389 to $395 million, which represents a 41% adjusted EBITDA margin at the midpoint. So, three things to keep in mind as you think about our second quarter and full year guidance for 2024. The first point is that we remain confident in our 2024 financial targets and have increased the midpoint of our guidance range.

The mid point, so three things to keep in mind as you think about our second quarter and full year guidance for 2024.

Speaker Change #107: The first point is that we remain confident in our 2024 financial target and have increased the midpoint of our guidance ranges. We're pleased with the broad based strength that we saw across the business in Q1, but keep in mind that year over year revenue growth rates can vary quarter to quarter because of contract timing variations.

Brian Herb: We're pleased with the broad-based strength that we saw across the business in Q1. But keep in mind that year-over-year revenue growth rates can vary quarter-to-quarter because of contract timings, variations in subscription revenue contracts with volume-based elements, and the pace of client adoption of new solutions.

Speaker Change #107: Subscription revenue contracts with volume based elements and the pace of client adoption of new solutions. The second point is that the emerging solutions contributed about one point of growth in Q1, and we expect the upsell cross sell of these new solutions will contribute about two points of growth in 2024 as they continued to scale.

Brian Herb: The second point is that the emerging solutions contributed about one point of growth in Q1, and we expect the upsell-crosssell of these new solutions will contribute about two points of growth in 2024 as they continue to scale. As Gitesh mentioned in his remarks, we are seeing positive feedback and client engagement around these emerging solutions, and this gives us confidence about their contribution to growth in the back half of 2024. The third point is that, in prior years, we experienced seasonality in our adjusted EBITDA margin, with the second half levels being above our first half levels and Q2 being the low point for the year.

<unk> mentioned in his remarks, we are seeing positive feedback and client engagement around these emerging solutions and this gives us confidence about the contribution to growth in the back half of 2024.

Speaker Change #107: The third point is that in prior years, we experience seasonality in our adjusted EBITDA margin with the second half levels being above our first half levels in Q2 being the low point for the year, we expect 2024 to be consistent with this pattern with the first half margins being constrained by the reset of employee related.

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. Overall, the strong trends we're seeing in renewals, relationship expansions, and new solution adoptions reinforce our confidence in the underlying strength of the business. The combination of our durable business model, advanced AI capabilities, interconnected network, and broad solution set puts us in a unique position to help our customers in the P&T insurance economy reduce their cycle times and administrative costs while improving their consumers' experience throughout the claims process.

Speaker Change #107: <unk> and the cost of our industry conference.

Speaker Change #107: Overall, the strong trends, we're seeing in renewals relationship expansions and new solution adoption reinforces our confidence in the underlying strength of the business.

Speaker Change #107: The combination of our durable business model advanced AI capabilities interconnected network and the broad solution set puts us in a unique position to help our customers in the P&C insurance economy reduce their cycle times and administrative costs, while improving their consumers experience throughout the claims process.

Speaker Change #107: Yes.

Brian Herb: We are confident in our ability to deliver against our long-term target of seven to 10% organic revenue growth in the mid-40s adjusted EBITDA margin as we continue to execute on our strategic priorities and generate value for both our customers and our shareholders. With that, operator, we're now ready to take questions. Thank you.

Speaker Change #107: We are confident in our ability to deliver against our long term target of 7% to 10% organic revenue growth and mid Forty's adjusted EBITDA margin as we continue to execute on our strategic priorities and generate value for both our customers and our shareholders with that operator, we're now.

Speaker Change #108: We're ready to take questions. Thank you.

Operator: As a reminder, if you would like to ask a question, please press star 11 on your telephone. Please wait for your name and company to be announced before you proceed with your question, as well as to ask that you limit yourself to one question and one follow-up. One moment.

Speaker Change #108: Thank you.

Speaker Change #109: As a reminder, if you would like to ask a question. Please press star one on your telephone. Please wait for your name of the company to be announced before you proceed with your question.

Yes.

Speaker Change #110: Just yourself to one question and one follow up one moment for our first question.

Saket Kalia: Our first question comes from Saket Kalia of Barclays. Your line is open. Okay, great. Hi, guys. Thanks for taking my questions here. And nice, nice strong start to the year.

Speaker Change #110: Our first question comes from Ken <unk> of Barclays. Your line is open.

Saket Kalia: Thanks. Sure. Gitesh, maybe we could start with you.

Ken: Okay, Great Hi, guys. Thanks for taking my questions here and nice a nice strong start to the year.

Ken: Thanks.

Githesh Ramamurthy: Listen, the corridor and the guide are pretty straightforward to the earlier point, so maybe I'll just start with a higher-level educational question. Can we just talk a little bit about the competitive environment in the casualty market? You know, I think you've talked about how there's plenty of room for adoption for casualties within your APD customer base. What types of solutions do you need to replace to make that happen?

Ken: Sure.

Ken: Catastrophe, maybe maybe to start with you.

Ken: The quarter and the guide are pretty straightforward to the earlier point. So maybe I'll just start with a higher level of educational question can we just talk a little bit about the competitive environment in the casualty market and I think you've talked about.

Catastrophe: How there is plenty of room for adoption for casual tweak within your customer base what types of solutions do you need to displace to make that happen and maybe just qualitatively how are those conversations sounding maybe more recently.

Saket Kalia: And maybe just qualitatively, how are those conversations sounding maybe more recently? Sure, Saket. Just to kind of dial back, like you said, a little further. So first and foremost, what we're seeing across the board for our customers is the complexity of managing medical claims and the dollars involved are increasing significantly. And they vary by geography, vary by jurisdiction; there's a lot more complexity, and a lot more costs starting to creep in.

Speaker Change #112: Sure second just do kind of dialed back like you said a little further.

So first and foremost what we're seeing across the board for our customers is complexity of managing medical claims in the dollars involved are increasing significantly and they vary by geography vary by jurisdiction as a lot more complexity more cost starting to creep in.

Githesh Ramamurthy: And one of the key advantages that we bring to the table that is fairly unique is that one in every five auto claims results in a medical claim. So when you have visibility to the breadth of the auto-physical damage claims that we have, the physics of the accident actually help inform what may or may not happen downstream, and that's a very important connection between the auto-physical damage side of the business and what happens when you have to deal with a medical claim So there are some very unique things we have visibility into.

Speaker Change #112: And one of the key advantages that we bring to the table.

Speaker Change #112: It is fairly unique is that.

Speaker Change #112: One in every five auto claim results into medical claim so when you have visibility to the breadth of the auto physical damage claims that we have.

Speaker Change #112: The physics of the accident actually help inform what may or may not happen downstream and that's a very important connection between the auto physical damage side of the business and what happens when you have to deal with the medical claims. So there are some very unique things we have visibility to one of the example.

Githesh Ramamurthy: One of the examples of that is when we introduced Impact Dynamics, which is an AI-based solution that takes the physics of the accident, the photos of the accident, and predicts the potential impact of medical claims and projections down the road.

Speaker Change #112: So that is when we introduced impact dynamics, which is an AI based solutions to it takes the physics of the accident the photos of the accident Imputes.

Speaker Change #112: Potential impact.

Speaker Change #112: Medical claims and projections down the road, that's a very very unique offering and that is one that can be adopted by whether existing or existing customers or not people can adopt it and I think we mentioned in the last probably last call that we are a top five carrier.

Githesh Ramamurthy: That's a very, very unique offering, and that is one that can be adopted by existing or existing customers, or not; people can adopt it. And I think we mentioned in the last, probably last call, that we had a top five carrier adopt that solution and saw a significant impact. So that's the linkage.

Speaker Change #112: <unk> adopt that solution and saw significant impact. So that's so that's the linkage I would just say on a broader basis. We have continued to see over the last year more clients adopt our.

Saket Kalia: I would just say on a broader basis that we have continued to see more clients adopt our casualty solutions over the last year, and there's always some unique aspect in terms of challenges that they're trying to solve, and that's really where we've been very focused, working with customers to solve those problems. So that's really kind of the overall view of what we're seeing. But the bottom line is we are continuing to see adoption by customers on cashflow. Got it.

Speaker Change #112: Casualty solutions.

There is always.

Speaker Change #112: Some unique aspect and trumps challenges, they're trying to solve.

Speaker Change #112: And that's really where we've been very focused is working with customers to solve those problems. So that's really kind of the overall view.

Speaker Change #112: What we're seeing but bottom line is we are continuing to see adoption of customers on.

Speaker Change #112: Casualty.

Brian Herb: That's, that's very clear, very helpful. Brian, maybe for my follow up question for you, you know, you've talked about sort of the growing contribution from emerging solutions. I think we said it would go from 1 point of growth here in Q1 to maybe 2 points for the year. Can you just talk a little bit about what degree of visibility you kind of have into that? You know, is that growth? I mean, that's very healthy growth, of course, off a small base.

Speaker Change #113: Got it.

Speaker Change #114: Very clear very helpful.

Speaker Change #115: Brian maybe for my follow up for you.

Brian: You've talked about sort of the growing contribution from emerging solutions I think we said it will go from one point of growth here in Q1 to two maybe two points for the year can you just talk a little bit about what degree of visibility you have into that is that is that growth.

Brian Herb: But is that sort of dependent on volume usage? Or is there some element of sort of contracted visibility that you have into that, which gives you confidence in that into that increasing growth contribution? Yeah, sure, Saket. So just on the metrics, so in Q1, as you said, we had one point of growth from emerging solutions. We do expect that to step up and continue to scale as we go through the year. We're expecting two points of growth contribution from emerging markets for the full year. To the question around visibility, you know, we look at it in three areas.

Brian: Very healthy growth of course off a small base, but is that sort of dependent on on volume usage or is there some element of sort of contracted visibility.

Brian: Do you have into that which gives me confidence into that into that increase in growth contribution.

Yes sure.

Just on the metrics. So Q1 as you said, we had one point of growth from the emerging solutions, we do expect that to step up and continue to scale as we go through the year, we're expecting two points of growth contribution from emerging for the full year to the question.

Brian: Around visibility, we look at it around three areas. One is existing clients that are using the product paying for the product.

Brian Herb: One is existing clients that are using the product, paying for the product, and they continue to ramp up their volume. And we have visibility into that. We also have clients that are testing the product and will move from test into pay and full production rollout, which again, there's good visibility. And then the third is converting pipelines, assigning new clients to these new solutions. So across those three areas, we have good visibility and feel confident in the step-up that we're expecting in the second half.

Brian: <unk> continued to adopt volume and ramp up their volume and we have visibility into that we also have clients that are testing the product and we will move from testing to pay.

Brian: And full production rollout, which again there is good visibility and then the third is converting pipelines is signing new clients onto these new solutions. So across those three areas. We have good visibility and feel confident in the step up that we're expecting the second half as catastrophe made in his remarks.

Saket Kalia: As Githesh made in his remarks, you know, the positive feedback from clients that are using the product or testing the product, the operating metrics that we're seeing as they're testing is all very, is going well. And we do feel that the step up, you know, as we get into the second half year and then towards the long term, we talk about emerging solutions being more like three to four points of growth. And that will develop over time. It's great to hear.

Brian: The positive feedback from clients that are using the product are testing the product.

Brian: The operating metrics that were seen as their test in is all vary.

Brian: Is going well and we do feel that the step up.

Brian: As we get into the second half here.

Brian: And then towards the long term, we talk about the emerging solutions being more like 3% to four points of growth and that will develop over time.

Operator: Thanks, guys. Thank you. Thank you. One moment for the next question, and our next question will be coming from Michael Funk of Bank of America. Your line is open.

Great to hear thanks, guys.

Thank you.

Speaker Change #116: Thank you wouldn't normally for the next questions.

Speaker Change #116: And we will be coming from Michael Li of Bank of America.

Speaker Change #116: Please.

Michael J. Funk: Yeah, great. Thank you for the question tonight, guys. So Gitesh, first one for you, you mentioned a few times in the call that customers are very early in the cloud transformation and obviously highlighted the benefits from the emerging solutions. So, you know, maybe just, you know, remind us of the revenue opportunity from products like S&TP and subrogation. I mean, clearly, the highly repeatable, you know, human interaction events are very, you know, very attractive to replace with AI.

Michael J. Funk: Yeah, great. Thank you for the question Tonight, guys. So detached first one for you you mentioned a few times on the call.

Michael J. Funk: Customers are very early in the cloud transformation and obviously you highlighted the benefit from the emerging solution. So maybe just remind us.

Michael J. Funk: The revenue opportunity from the products like estimate FTP and subrogation I mean, clearly the repeatable.

Michael J. Funk: Human interaction events are very very attractive to replace with AI. So where are we in that transformation and do you expect we'll see a tipping point.

Githesh Ramamurthy: So, you know, where are we in that transformation, and do you expect we'll see a tipping point in the adoption as we ramp towards the revenue opportunity you've talked about? Maybe you want to highlight that again tonight?

Michael J. Funk: The adoption of the ramp towards.

Michael J. Funk: The revenue opportunity you talked about maybe you want to highlight again Tonight.

Githesh Ramamurthy: Sure, sure, Michael. Let me kind of start with some broad-based patterns that we've really seen with our customers over literally the last two or three decades. So, what typically happens is that, you know, customers are continuously looking to deal with complexity. I'll give you a couple of minor examples that lead into some major decisions, right? For example, the number of parts per vehicle used to be eight parts per vehicle.

Sure sure Michael Let me kind of start with the first broad based patterns that we've really seen with our customers.

Michael J. Funk: We're literally last two or three decades, so what typically happens is that.

Customers are continuously looking to deal with complexity.

Michael J. Funk: I'll give you.

Michael J. Funk: A couple of minor examples that lead into some major decisions right.

Michael J. Funk: Number of parts per vehicle used to be eight parks.

Michael J. Funk: Eight parts per vehicle today, we're up to 14 parts per vehicle.

Githesh Ramamurthy: Today, we're up to 14 parts per vehicle. So the complexity on a whole range of fronts is increasing, and at the same time, the macro trend we've talked about, which is the number of experienced people in the industry, is decreasing, both for our insurance customers and repair facilities. The demand for experienced people is strong, whereas the supply of really talented and capable people is less.

Michael J. Funk: So the complexity on a whole range of prices, increasing and at the same time the macro trend we've talked about which is the number of experienced people in the industry is decreasing both for our insurance customers with repair facilities.

Michael J. Funk: The demand for experienced people.

Michael J. Funk: His strong, whereas the supply of really talented and capable people is less so across the board our customers are trying to solve more complex problems.

Githesh Ramamurthy: So, across the board, our customers are trying to solve more complex problems in a more effective and more efficient manner, and that is the big, broad, macro trend that we have seen. And what we are now seeing, especially as pricing starts to normalize, is that customers are starting to be much, much more thoughtful about digital transformation in a broader way. So we are seeing more interest in digital transformation.

Michael J. Funk: More effective and more efficient manner.

Michael J. Funk: Is the big broad macro trend that we have seen and what we are now seeing especially as pricing starts to normalize.

Michael J. Funk: What we are seeing as customers start to make much much more thoughtful about digital transformation in a broader way.

Michael J. Funk: So we are seeing more interest in digital transformation. If you remember when we introduced our first our AI solution, which went from photo to an estimate I think that was in November of 2021.

Githesh Ramamurthy: If you remember, when we introduced our first AI solution, which went from photo to estimate, I think that was in November of 2021. AI was not widely talked about as it has been, let's say, in the last 12 to 18 months.

Michael J. Funk: AI was not widely talked about as it has been let's say in the last 12 to 18 months. So people are starting to really get comfortable that AI as a capability that amplifies their people's capability to handle more decisions more quickly.

Githesh Ramamurthy: So people are starting to really get comfortable that AI has a capability that amplifies their people's capability to handle more decisions more quickly across the board. So that macro view of digitizing, using technology to make decisions is happening. So now getting to the specifics of your question. So when you look at something like Estimate SDP, what you're seeing is that it really speeds the ability for staff appraisers, for consumers to send in pictures, get an estimate, or jumpstart at the repair facility, really substantially reduces the speed at which estimates can be produced.

Michael J. Funk: <unk> across the board so that macro view of digitizing using technology to make decisions is happening. So now getting to the specifics of your question. So when you look at something like estimate. So when you look at something like estimate SDP, what youre seeing is that it really speed.

Michael J. Funk: Leads the ability for staff appraisers for consumers to send in pictures get an estimate or jumpstarted the repair facility.

Michael J. Funk: Really Inc.

Daschle reduces speed at which estimates that can be produced and then when you think that solutions like subrogation, where you might get 200 base demand for inbound and our solution in matter of a minute or two can really give you a very fast and very precise response.

Githesh Ramamurthy: And then when you think of solutions like subrogation, where you might get a 200-page demand for inbound, and our solution, in a matter of a minute or two, can really give you a very fast and very precise response that increases accuracy. So every single solution we're developing has these characteristics in terms of efficiency, effectiveness, increasing the productivity of people, and a very specific ROI. And hence, you know, that's why we have focused on innovating across so many different solutions. Now, thank you for that, Gitesh. Maybe one more, Brian, if I could just quickly.

That increases the accuracy so.

Michael J. Funk: Every single solution were developing.

Michael J. Funk: As these characteristics in terms of efficiency the effectiveness, increasing the productivity of people.

Michael J. Funk: And a very specific ROI and hence that's why we.

Michael J. Funk: Focused on innovating across so many different solutions.

Michael J. Funk: You've talked about the cloud infrastructure transition that you undertook moving from private to public. Any comment on how to think about that impacting operating leverage or margin as you've made that transition? Yeah, hey, Mike.

Thank you for that cash maybe one more Brian if I could quickly you've.

Speaker Change #117: You've talked about the cloud infrastructure a transition that you are talking from private to public.

Any comment on how to think about that impacting operating leverage or margin you've made that transition.

Brian Herb: Yeah, we have fully transitioned. So we are on the new infrastructure serving clients and deploying solutions through that. We do still have some legacy cloud environments that we are winding down, and we'll be doing that over time.

Yeah, Hey, Mike.

Mike: Yes, we have fully transitioned so we are on the new infrastructure on serving clients and deploying solutions through that.

Mike: We do still have some legacy cloud environment that we are winding down and we will be doing that over time and so we talk about it.

Mike: Hosting cost being up in the quarter part of that is the growth of the business and building out against the pipeline and innovation and then part of it is the decommissioning of the legacy platform environment that will wind down.

Michael J. Funk: And so we talk about the IT hosting cost, being up in the quarter. Part of that is just the growth of the business and building out against the pipeline and innovation. And then part of it is the decommissioning of the legacy platform environment that will wind down as we go forward. Overall, we're still really happy with the margin progression; we had about 240 basis points of margin progression quarter over quarter or year over year. So again, within that, we feel like we're in a really good spot within our cost base. Great, thank you both.

Mike: As we go forward overall, we're still really happy with the margin progression, we added about 240 basis points of margin.

Mike: Progression quarter over quarter or year over year. So again within that we feel like we're in a really good spot within our cost base.

Speaker Change #118: Great. Thank you both.

Speaker Change #119: Thank you.

Operator: Thank you. Thank you for your question. One moment for the next question. And our next question is coming from Tyler Radke of City. Your line is open. Hey, good afternoon.

Thank you for your questions one moment for the next question is.

Speaker Change #119: And our next question is coming from Tyler Radke of Citi. Your line is open.

Tyler Maverick Radke: Thanks for taking the question. I wanted to ask you, Githesh, about the new event-driven architecture you referenced during the call. I'm sure we'll hear a lot more about that at the conference here in a couple of weeks, but can you just talk about the theoretical future use cases and what you're doing from a back-end technology perspective to enable that? If there's an opportunity for monetization, either price increases or new SKUs with this new architecture,

Tyler Maverick Radke: Hey, good afternoon, thanks for taking the question.

Tyler Maverick Radke: What are the detached about.

Tyler Maverick Radke: The new event.

Tyler Maverick Radke: Event, driven architecture, you referenced on the call I'm sure, we'll hear a lot more about that out at the conference here.

Tyler Maverick Radke: And a couple of weeks, but can you just talk about the.

Tyler Maverick Radke: <unk>.

Theoretical future use cases, what youre doing from a backend technology perspective to enable that and if there is opportunity for monetization either price increases or new skus with this new architecture.

Githesh Ramamurthy: Sure, Tyler; happy to take that question. So what we have done over the years, as you know, we have been running a multi-tenant cloud platform for many years. And one of the key things that we see in terms of giving our customers a step up in performance is really taking events and decisions that are taking place across the network. What do I mean by that? That means you might have a repair at a repair facility that is not actually a repair but might turn out to be a total loss. Or you might have some other decision on the medical front.

Speaker Change #120: Sure Tyler happy to take that question so.

What we have done over the years as you know we have been running a multi tenant cloud platform for many years.

Speaker Change #120: And one of the key things that we see in terms of.

Tyler Maverick Radke: Getting our cost, giving our customers a step up in performance is really taking events and decisions that are taking place across the network. What do I mean by that that means you might have a a repair at a repair facility that is not actually a repair but might turn out to be.

Tyler Maverick Radke: The loss you might have some other decision on.

Tyler Maverick Radke: On the medical front, you might have a consumer who changed his or her mind about something that needs to be reflected downstream. So many of these decisions and events would take a lot of time to move from one place to the other.

Githesh Ramamurthy: You might have a consumer who changed his or her mind about something that needs to be reflected downstream. Many of these decisions and events would take a lot of time to move from one place to the other. What we have developed is an event-based architecture that really very quickly moves events from one place to the other, maximizing essentially the overall performance of the claim because there are literally hundreds of decisions that have to be made in every claim, and the permutations can be intense, and the data that's needed can be pretty intense.

Tyler Maverick Radke: And what we have developed is an event based architecture that debt.

Tyler Maverick Radke: That really very quickly moves events from one place to the other maximizing essentially the overall performance of the claim.

Tyler Maverick Radke: There are literally hundreds of decisions that have to be made in every claim and the permutations can be intense and the data that's needed can be pretty intense and what we're seeing with our AI, which is which has been delivered in line with existing workflows is the combination of AI.

Githesh Ramamurthy: What we're seeing with our AI, which has been delivered in line with existing workflows, is the combination of AI and this event-driven architecture, which we think is a major way to really deliver more functionality and capability. And this platform, which we call the CCCIX Cloud, is an overlay on our existing architecture. So customers will get it automatically. It's already included. There's no upgrade path.

Tyler Maverick Radke: And this event during architecture, we think as a major way to really deliver more functionality and capability.

Tyler Maverick Radke: This platform, which we call the CCC IX cloud is an overlay on our existing architecture. So there so customers will get it automatically. It's already included there is no. There is no upgrade path. It works everything works without disrupting what they have and it works in line.

Githesh Ramamurthy: It works. Everything works without disrupting what they have and works in line. But what it really does is gives us the ability to deliver many, many more innovations across the entire supply chain with those solutions having very unique and specific ROIs. And those solutions will be deployed by customers, and they'll have their own unique ROI and price, but not for this architect. Very helpful.

Tyler Maverick Radke: But what it really does is gives us the ability to deliver many many more innovations across the entire supply across the entire supply chain.

With those solutions, having very unique and specific rois and those will be.

Tyler Maverick Radke: Solutions will be deployed by customers and they'll have their own unique ROI in pricing.

Tyler Maverick Radke: But not for this architecture.

Tyler Maverick Radke: If I could ask a question, follow up for you, Brian. So just on the emerging solutions contribution, you know, the one point this quarter sounds like two points for the full year. I guess the path to get there, should we think about an exit rate of three points or something above two? Or is the way to think about it is that it ramps up to two points by Q4? Thank you. Yeah, it's Hey Tyler.

Speaker Change #121: Very helpful.

Speaker Change #122: If I could ask a question.

Speaker Change #123: A follow up for you, Brian So just on the emerging solutions contribution.

Brian: Yeah. The one point this quarter it sounds like two points for the full year I guess the path to get there should we think about an exit rate of three point or something above two or is the way to think about it as it ramps up to two points by Q4. Thank you.

Brian Herb: Yeah, as I said, we're going to continue to see the step up as we go through the year, and the contributions can be larger in the second half. What we're not specifically breaking down kind of exit run rate, I would just reiterate the two points for the full year we feel good about over time. We're expecting, and have talked about within the long-term guide, that stepping up to three to four points. And we'll see that progress as we go from how we exit this year into 25 and beyond. So we're not going to get more specific than that at this stage.

Brian: Yes.

Speaker Change #124: Hey, Tyler.

Speaker Change #125: As I said, we're going to continue to see the step up as we go through the year and the contributions can be larger in the second half, we're not specifically breaking down kind of exit run rate Tom I would just reiterate the two points for the full year, we feel good on over time.

Speaker Change #125: We are expecting and have talked about within the long term guide that stepping up to three to four points and we will see that progress as we go from here.

How we exit this year into 25 and beyond so we're not going to give more specific than that at this stage a toddler theres just one more thing I'd add to what Brian said.

Githesh Ramamurthy: Hey, Tyler, there's just one more thing I'd add to what Brian said. You know, from my vantage point, all the revenue we deliver today was an emerging solution at one point or another, right? So when you think about it, you know, all of these solutions, in fact, they all have very long runways.

Speaker Change #126: From my Vantage point all of the revenue would deliver today, where an emerging solution at one point or the other right. So when you think about it.

Speaker Change #127: All of these solutions in fact, they all have very long runways, and what I get excited about is that.

Tyler Maverick Radke: And what I get excited about is that, you know, some of the solutions which were emerging at one point, 10 years later, 15 years later, they're still continuing to grow, and some 25 years later, they're continuing to grow very nicely. So our focus often is on building and delivering those long-term solutions with long runways. And I just wanted to make sure that, you know, I add that piece as well. Very helpful.

Speaker Change #127: Some of the solutions, which were emerging at one point 10 years. Later 15 years later, they're still continuing to grow in somewhat some 25 years later or continuing to grow very nicely. So our focus often is on building and delivering those long those solutions with long runways.

And I just wanted to make sure that I add that piece as well.

Speaker Change #128: Very helpful. Thank you.

Speaker Change #129: Thank you.

Operator: Thank you. Thank you. One moment for our next question, and our next question is coming from Alexei Gogolev of J.P. Morgan. Your line is open.

Speaker Change #130: Our next questions.

Speaker Change #130: And our next question is coming from Alexi.

Alexi: Google glass.

Alexi: J P. Morgan your line is open.

Alexei Gogolev: Hello, everyone. Thank you for letting me ask a question. Githesh, I wanted to ask you about payments you mentioned on today's call. Once again, the $100 billion in transactions on your platform. When do you expect to see a more pronounced tailwind to revenue growth from greater involvement in the payment? You know, the as, as you know, Alexei, good to hear from you. And as I've said before, The opportunities and the complexities of what our payment solutions can solve we are seeing that every day with customers.

Alexi: Hello, everyone. Thank you for letting me ask a question on catastrophe.

I wanted to ask you about payments you've mentioned on today's call once again.

Alexi: $100 billion in transactions on your platform when do you expect to see a more pronounced tailwind to revenue growth from greater enrollment in the payments world.

Alexi: You know the.

Speaker Change #131: As as it like I say good to hear from you and as I've said before.

Speaker Change #131: The opportunities and the complexities of what our payment solutions can solve we're seeing that every day with customers. There's a lot of complexity. It is it will run we think at a slower pace compared to our other solutions for sure.

Alexei Gogolev: There's a lot of complexity. It will run, we think, at a slower pace compared to our other solutions, for sure. And we don't think, you know, I think towards the latter part of the year, we can hopefully give you more of an update on that.

Speaker Change #131: And we don't think.

Speaker Change #131: Think towards the latter part of the year, we can hopefully give you more of an update on that but we have continued to expand the capabilities of that solutions and a broader set of problems our customers want us to solve so we've been continuing to work on that but that's where we are.

Githesh Ramamurthy: But we have continued to expand the capabilities of that solution and a broader set of problems our customers want us to solve. So we've been continuing to work on that, but that's where we are. Thank you, Githesh.

Speaker Change #132: Thank you good question.

Alexei Gogolev: Brian, could I ask you to elaborate a bit more on the sequential increase in stock-based compensation during the quarter? Yeah, absolutely. So yes, stock-based comp did go up in the quarter versus where it's been trending more recently. Q1 is the high watermark for the quarter as a percent of revenue, but we do expect it to step down and move down as we go through the year. As we get into 2025, it will look like a more normalized rate and be more like 12 to 14. percent of revenue. That's what we expect it to run from 25 going forward.

Speaker Change #131: Ryan.

Speaker Change #133: Could I ask you to elaborate a bit more.

Ryan: On the sequential increase in stock based compensation in the quarter.

Ryan: Yeah, absolutely. So yes stock based comp did go up in the quarter versus where it's been trending more recently.

Ryan: Q1 is when.

Ryan: We expect to be the high watermark.

Ryan: For the quarter as a percent of revenue, we do expect it to step.

Stepped down and move down as we go through the year as we get into 2025. It will look like a more normalized rate and be more like 12% to 14% of revenue.

Ryan: That's what we expect kind of running from 25% going forward. So we do expect.

Ryan: Up that we saw in Q1 to moderate and to normalize when we get into next year.

Brian Herb: So we do expect the step-up that we saw in Q1 to moderate and to normalize when we get into next year. Thank you, Brian. Thank you. One moment for the next question. And our next question will be coming from Josh Baer of Morgan Stanley. Your line is open. Thanks, and congratulations on a strong quarter. Another question on the growth algorithm.

Speaker Change #135: Perfect. Thank you Brian.

Brian: Thank you and we'll move to the next question is.

And our next question is coming from Josh Baer.

Joshua Phillip Baer: Of Morgan Stanley Your line is open.

Joshua Phillip Baer: You know, Emerging Solutions' increasing contribution is definitely exciting. It's a clear positive. I think it's key to the durability of growth.

Joshua Phillip Baer: Thanks, and congrats on a strong quarter. Another question on the growth algorithm.

Joshua Phillip Baer: Emerging solutions, increasing contribution is definitely exciting it's a clear positive I think.

Joshua Phillip Baer: A key to the durability of growth. The question is on the rest of the parts of the growth algorithm is emerging solutions was a one point contribution on 11% overall growth this quarter going to two points on 9% total thats several points of growth coming away. So just one.

Brian Herb: The question's on the rest of the parts of the growth algorithm. If Emerging Solutions was a one-point contribution on 11% overall growth this quarter, going to two points on 9% total, that's several points of growth coming away. So, just wondering where that growth is coming from and, you know, and why wouldn't it grow?

Speaker Change #136: Where where is that coming from.

Speaker Change #136: And why wouldn't the growth.

Joshua Phillip Baer: in Logos or Established Solutions be more durable? Yeah, absolutely. So maybe we started the long-term guide, then we can walk backwards, because the way we framed the long term, so we talked about seven to 10, organic revenue growth over time. We say 80% of that will be from existing clients with cross-sell upsell, and 20% from new logos. So that's where we set the expectation as we're moving towards where we are today.

Speaker Change #136: In logos or establish solutions be more durable.

Yes, absolutely.

Speaker Change #136: So the way maybe we start at the long term guide then we can work backwards because the way we frame the long term. So we took about 7% to 10 organic revenue growth over time.

Speaker Change #136: Say, 80% of that will be from existing clients with cross sell upsell and 20% from new logo.

Speaker Change #136: That's where we set the expectation is we're moving towards.

Where we are today as you highlighted we're seeing about 30% growth from new logo.

Joshua Phillip Baer: As you highlighted, we're seeing about 30% growth from new logos. And then out of the remaining growth from cross sell upsell, you know, high percentages from established, over time, we just expect the emerging to become a larger part of the equation going forward. So it's more of a glide path, and it is a hard cutover.

Speaker Change #136: And then out of the remaining <unk>.

Speaker Change #136: Growth from cross sell up sell high percentages from established overtime, we just expect the emerging to become more to be a larger part of the equation going forward.

Speaker Change #136: So it's more of a glide path and it is a hard cutover.

Speaker Change #136: How we see it playing out over time.

Brian Herb: But how we see it playing out over time, Okay, I guess another way to put it more positively spin it if, if new logo growth or established solutions held in a bit more durable over the next few quarters, and you had confidence in the step up and emerging solutions, you know, that would be upside for the full year. Does that make sense? Yeah, it does.

Speaker Change #137: Okay, I guess, another another way to put it more and.

Speaker Change #137: More positive spin.

Speaker Change #137: If new logo growth or established solutions held in a bit more durable over the next few quarters and you have confidence in the step up in emerging solutions that would be upside for the full year does that makes sense.

Joshua Phillip Baer: I mean, we're always looking to deliver against the guide or outperform the guy that we have in the market. So, you know, we're pushing on all sides of it, you know, driving hard at the core and the established solutions, driving hard at new logos and continuing to remain strong and then building out the, you know, getting the momentum behind the emerging. So, you know, we're driving all three of those. So yeah, that's a good way of framing it.

Speaker Change #138: Yes. It does I mean, we're always looking to deliver against the guide or outperformed the guy that we have in the market. So we're pushing on all sides of it driving hard at the core and the established solutions driving hard at new logos and continuing to remain strong and then building out getting the momentum behind the emerging so.

Speaker Change #138: We're driving all three of those so yes, that's a good way of framing it.

Speaker Change #139: Great. Thank you.

Speaker Change #139: Yes.

Brian Herb: Great, thank you. Yes. Thank you for your question. One moment, please, for the next question. And our next question will be coming from Dylan Becker of William Blair. Your line is open. Hi guys, it's Faith on for Dylan.

Speaker Change #140: Thank you for your question one moment. Please for the next question.

Speaker Change #140: And our next question will be coming from Dylan Becker.

Dylan Tyler Becker: Of William Blair. Your line is open.

Dylan Tyler Becker: Hi, guys. Its based on per gallon, if I could start with my first question being a more high level industry trend that we're seeing so as you continue to see premiums increase we're also seeing an uptick in issue driver either.

Dylan Tyler Becker: If I could start with my first question being a more high-level industry trend that we're seeing. So, as we continue to see premiums increase, we're also seeing an uptick in issues with drivers either being uninsured or underinsured. How is this playing into the overall level of complexity in the claims ecosystem? And how are you seeing the different stakeholders react to this? Sure, you know, a couple of things. We are seeing some variation state by state as well in that mix.

Uninsured or underinsured, how is this playing into the overall level of complexity in the claims and how you're seeing the different stakeholders react to that.

Sure.

Speaker Change #141: A couple of things.

Speaker Change #141: We are seeing some variation state by state as well in that mix.

Dylan Tyler Becker: So customers are noticing and have started to deal with that, both at first notice of loss and also in terms of how that makes its way into medical claims and a variety of other places. And it's not had a material change on what our customers really pay for is what is frequency times cost of claim. So it hasn't impacted that number for our customers, but it has, like you pointed out, increased the complexity and, essentially, in something like subrogation, how they recover those dollars. That is really where we're seeing some specific differences in how you recover dollars, especially when your policyholder is not at fault, and that's where we're seeing more complexity. Okay, cool. That's a helpful color.

Speaker Change #141: So.

Speaker Change #141: Customers are are noticing and start have started to deal with that at both at first notice of loss and also in terms of how that makes its way into medical claims.

Speaker Change #141: And a variety of other places.

Speaker Change #141: It has not had a material change on.

Speaker Change #141: What our customers really pay for is the is what is frequency times cost of claim so it hasnt impacted that number for our customers, but it has like you pointed out <unk>.

Speaker Change #141: Increased the complexity and essentially in something like subrogation, how they recover those dollars.

Speaker Change #141: That is really where we're seeing some specific differences and how you recover.

Speaker Change #141: Especially when your policyholders not at fault.

Speaker Change #141: And that's where we're seeing more complexity.

Githesh Ramamurthy: And then for my second question, throughout the call, there's been a lot of talk about the different AI advancements between inbound separation and the IX cloud. How are these all fitting together to kind of drive those better outcomes for the ecosystem? And what's really ahead on the AI roadmap as more stakeholders get more comfortable with this technology and look to implement it? Yes, the short answer is yes. You know, we have... We've had the benefit of taking this industry from books, paper, and pencil to write collision estimates to laptop computers to CD-ROMs to artificial intelligence, and so we've kind of continued to work closely with our customers.

Speaker Change #142: Okay Cool that's helpful color and then.

Speaker Change #142: My second question throughout the call Theres been a lot of talk about the different AI advancements between inbound subrogation then the IX cloud.

Speaker Change #142: How are these all sitting together.

Speaker Change #142: Better outcomes for the ecosystem and what's really ahead on the AI roadmap edmar stakeholders get more comfortable with this technology and look to adapt it.

Speaker Change #143: Yes, the short answer is yes.

Speaker Change #143: We have.

Speaker Change #143: We have we've had the benefit of taking this industry from.

Speaker Change #143: Books paper and pencil to write collision estimates to laptop computers to CD Roms do artificial intelligence and so we've kind of continued to work closely with our customers.

Githesh Ramamurthy: And if you look at, for example, adoption by various segments of our customer base, obviously, our OEM customers have very sophisticated needs and understanding. Our repair facility customers, I think we just said that we had over 5,000 of our repair facility customers adopt and use JumpStart, which really allows them to take pictures, write an estimate in seconds, and then augment that. So we are starting to get a comfort level from the repair facilities, and obviously, for the last two to three years, we've had these solutions deployed with insurance companies, and we are seeing customers very carefully and thoughtfully continue to adopt them.

Speaker Change #143: And if you look at for example adoption by various segments of our customer base, obviously, our OEM customers.

Sophisticated needs and understanding a repair facility customers I think we just said that we had over 5000 of a repair facility customers adopt and use jumpstart, which really allows them to take pictures write an estimate in seconds and then augment that.

Speaker Change #143: So we are starting to get a comfort level from the repair facilities.

Speaker Change #143: And obviously for the last two three years, we've had these solutions deployed with insurance companies and we are seeing customers very carefully and thoughtfully continue to adopt.

Githesh Ramamurthy: And this is where transparency becomes really important, and traceability of how those algorithms came about, all those things are really important. And the accuracy of what we can deliver also becomes extraordinarily important. So that comfort and confidence we can give to our customers, that when we produce something, we also produce a confidence interval about how confident we are about an answer that then people are using to make those decisions.

Speaker Change #143: And this is where transparency becomes really important traceability of how those algorithms came about all those things are really important and the accuracy of what we can deliver also becomes extraordinarily important so.

Speaker Change #143: Comfort and confidence we can give to our customers that will be produced something we also produce a confidence interval about how confident we are about and answer that then there.

Speaker Change #143: People are using to make those decisions on.

Dylan Tyler Becker: So the short answer is yes, overall we continue to see very strong. All right, awesome, that's it, guys. Thank you. One moment for the next question, and our next question will be coming from Gary. Shlomo Rosenbaum, Arvind Ramnani, Tyler Radke, Gary Prestopino, Michael Funk, Shlomo Rosenbaum, Arvind Ramnani, Tyler Radke, Gary Prestopino, Joshua Baer, Samad Samana, Thank you, Githesh. Hey Gary, a couple of questions. With the introduction of inbound subrogation, did that automatically attach to entities that were using outbound subrogation, or is that sold a la carte, you know, inbound and outbound sold a la carte? Hey Gary, the short answer is... Yes, it can be adopted individually.

Speaker Change #143: So the short answer is yes overall, we're continuing to see very strong interest.

Speaker Change #144: Alright awesome that's it.

Speaker Change #144: Okay.

Thank you for the next question is.

Speaker Change #144: And our next question will be coming from Gary.

Gary: Piano Barrington Research your line is open.

Hi, Brian.

Gary: Hey, Gary a couple a couple of questions.

Gary: With the introduction of the inbound subrogation.

Gary: Automatically attach to entities that were using the outbound subrogation or.

Gary: Is that sold Ala carte.

Gary: Inbound and outbound sold Elkhart.

Gary: Hi.

Gary: Hey, Gary the short answer is yes.

Gary: Yes, it can be adopted individually. So we have customers that have chosen to adopt both inbound and outbound at the same time, we have customers that started out starting out with outbound.

Githesh Ramamurthy: So we have customers that have chosen to adopt both inbound and outbound at the same time. We have customers that started out, starting out with outbound. And so it can work any way. And that's generally how all our solutions work. You can adopt, you know, any components because it works seamlessly with all the other components.

Gary: And.

Gary: So it can work.

Gary: Anyway.

Gary: Thats generally how all our solutions, where you can adopt.

Any components because it works seamlessly with all the other components.

Gary Frank Prestopino: Are you finding that the ones that we're using outbound are, you know, more rapidly adopting inbound to have that end-to-end solution? It's actually more the other way around; we are seeing much more interest in inbound because of the complexity. And then many of those customers are choosing to also, you know, say, hey, once we get this rolled out, we want to move to your outbound solutions. Some are actually starting with both.

Gary: Are you finding that the ones that were using outbound are.

Are rapidly adopting inbound to to have that.

Gary: <unk> solutions.

Gary: It's actually more the other way around we are seeing much more.

Gary: Interest in inbound because of the complexity and then many of those customers are choosing to also.

Gary: Hey, once we get this rolled out we want to move to your outbound solutions some are actually starting with both.

Githesh Ramamurthy: And then just one question on this cloud IX, where you're talking about taking events and decisions across the network to improve claims processing. Would that also be applicable if there was a dispute about who was at fault in an accident? Can this product help with that since you've got a whole data set of various accidents that that that show who was at fault if fault is determined?

And then just one question on this cloud IX, where youre talking about taking events and decisions across the network to improve claims processing.

Does that would that also be applicable to if there was a dispute that who is at fault.

Speaker Change #145: And then Ken can this.

Speaker Change #145: Product help with that since you got all hold data set.

Speaker Change #145: Various accident.

Speaker Change #145: That show who is at fault.

Speaker Change #145: Bolt was determined.

Gary Frank Prestopino: Yeah, those are things that we'll probably come up with, because what you're fundamentally talking about is liability determination. So, when you think about liability determination, there are a number of factors that actually come in. For example, we have intersection data, we have weather data, you know, was someone taking a left turn, you know, who had the right-of-way when a certain accident took place.

Ken: Yes, those are things that will probably come up with because you're what you're fundamentally talking about his liability determination. So when you think about liability and termination there are a number of factors that actually come in for example, we have intersection data we have weather data.

Ill, let someone taking a left turn who had the right of way when a certain maximum took place. We also have some pieces that can do accident reconstruction. So these are all capabilities that we can introduce and the power of the IX cloud is to put all of these pieces together in a seamless.

Githesh Ramamurthy: We also have some pieces that can do accident reconstruction. So, these are all capabilities that we can introduce, and the power of the IX Cloud is to put all of these pieces together in a seamless, easy-to-absorb manner so that at the individual claim level, you can get optimum performance. Thank you. Thank you for your question. One moment for the next question. Our next question will be coming from Samad Samana of Jeffries. Your line is open. Hey guys, thanks for taking my question. This is Jeremy on First Cause.

Ken: This easy to absorb manner.

Ken: So that had an individual claim level you can get optimum performance.

Ken: Okay.

Speaker Change #146: Thank you.

Speaker Change #147: Thank you for your question one moment for the next question.

Speaker Change #147: Our next question will be coming from Smart Atlanta of Jefferies. Your line is open.

Samad Saleem Samana: A lot of my questions have already been asked. Maybe one more quick one on emerging products. So in order to achieve that three to four points of growth in the longer term, I guess, what percent of the client base do you see is likely having to adopt these products? I guess what's the penetration that you need there? And what's that terminal penetration?

Smart Atlanta: Hey, guys. Thanks for taking my question. This is Jeremy on for Scott a lot of my questions have already been asked maybe one more quick one on emerging products. So in order to achieve that three to four points of growth in the longer term I guess what percent of the client base do you see as likely having to adopt these products I guess, what's the penetration that you need there and what's that terminal penetration.

Brian Herb: Yeah, hey, good question. Yeah, I mean, we look at it as a deployment of the solutions across the existing base. So, you know, when we think about kind of where we are with the ecosystem and all the participants of the ecosystem, many of them have the established solution, so we just see them stepping up the penetration across the emerging. So we're not kind of calling out a percent of our existing clients to convert them.

Smart Atlanta: Yes.

Speaker Change #149: Good question, Yes, I mean, we look at it as a deployment of the solutions across the existing base.

Speaker Change #149: When we think about kind of where we are with the ecosystem and all of the participants of the ecosystem.

Speaker Change #150: Many of them have the established solutions. So we just see them stepping up the penetration across the emerging.

Samad Saleem Samana: It's more that as they step into the adoption process, it will ramp up over time. Gotcha. That's helpful. And then, maybe, a quick one.

Speaker Change #150: So we're not kind of calling out a percent of our existing clients to convert its more.

Speaker Change #150: They step into the adoption then it will ramp up over time.

Speaker Change #151: Got you that's helpful. And then maybe quick ones. You mentioned you began rolling out the new top 20, Apd insurance client that you announced last year I guess can you maybe remind us what does the rollout like this look like and when do you expect to full revenue contribution from the <unk> sure.

Brian Herb: You mentioned you began rolling out the new top 20 APD insurance clients that you announced last year. I guess, can you maybe remind us what a rollout like this look like, and when do you expect the full revenue contribution from this insurer? Yeah, absolutely. It will start to fully contribute in the second half of the year. It will start to play into the Q2 numbers, but it will not be fully rolled out. So it will partially come into Q2 and then fully roll out in the second half. We just started. Gotcha. That's a very useful color.

Speaker Change #152: Yeah, absolutely it will start to fully contribute in the second half of the year It will start to.

To play into the Q2 numbers, but not fully rolled out so it will it will partially come into Q2, and then fully rollout in the second half we just started.

Samad Saleem Samana: Thanks for taking my questions, guys. Yeah, absolutely. Thank you for your question. One moment for the next question. The next question is coming from Kirk. Mattern, All right, this is Bill Hunter. Unknown Attendee Hi, this is Bill. I'm on behalf of Kirk.

Speaker Change #153: Got you that's useful color. Thanks for taking my questions guys.

Speaker Change #154: Yes, absolutely.

For your question one moment to the next questions.

Speaker Change #154: The next question is coming from Kirk.

Kirk: Match ours.

Kirk: Hi, This is bill.

Kirk Materne: And thanks for taking my question. Auto insurance has been going up recently based on inflation. With that in mind, how are companies thinking about IT spending in your industry? In fact, you know, I was just talking to a customer in my office just today. And what they are looking for is, you know, any solutions that can give them rapid ROI. So people are very open to more solutions. They're not looking at this as, should I increase my IT spend, or should I decrease my IT spend? What people are saying are solutions that I can deploy easily that give me ROI.

Your line is that this is bill on for Kirk and Thanks for taking my question on the auto insurance has been up recently based on inflation.

With that in mind, how our company is thinking about it spend in your industry.

In fact.

Bill: I was just talking to a customer in my office just today.

And what they are looking for is.

Bill: Any solutions that can give them rapid ROI. So people are very open to more solutions, they're not looking at this as trying to increase my spend or should have decreased by 80 spend what people are saying is solutions that I can deploy easily that give me ROI.

Bill: I am ready to put that in place and the last two years have shown that people need to be competitive.

Speaker Change #155: Great. Thanks.

Speaker Change #156: Thank you for your question the next question.

Speaker Change #156: Yeah.

We will be coming from Chris Moore.

Christopher Paul Moore: I see.

Githesh Ramamurthy: I am ready to put that in place. And the last two years have shown that, you know, people need to be competitive. Great, thanks. Thank you for your question. The next question will be coming from Chris Moore of C.J. Securities. Your line is open. Hey, good afternoon, guys. Thanks for taking the time to answer the question. But obviously, you know, given the conversation you started with about the investment, you're making an IX cloud, you know, and across the board, R&D was, you know, higher than normal, close to 22% this quarter, almost 50 million, just trying to understand if this is kind of the new normal level moving forward, or, you know, kind of how we should think about that at this stage. That might include stock. Yeah, it does, Chris. So it's Brian.

Christopher Paul Moore: P J Securities Your line is open.

Christopher Paul Moore: Hey, good afternoon, guys. Thanks for taking my question most of my answer but.

Speaker Change #157: Obviously, given the conversation started with on on the investment you're making in IX cloud.

Speaker Change #158: And across the board R&D was higher than normal close to 22% this quarter almost $50 million just trying to understand if this is kind of.

Speaker Change #158: The new normal level moving forward or.

Speaker Change #158: Kind of how we should think about that at this stage.

Christopher Paul Moore: Yeah, you have to look at it kind of in excluding stock comp. So that will be the biggest driver. If you exclude stock comp, you know, there it does continue to grow, but it's pretty moderate.

Speaker Change #158: It might include stock, yes, it does Chris it's Bryan.

Bryan: You have to look at it kind of in a excluding the stock comps so that that will be the biggest driver if you exclude stock comp.

Bryan: It does continue to grow.

Bryan: It's pretty moderate we talked about in the past that we.

Bryan: Ted.

Brian Herb: We talked about in the past that we had a meaningful step up in capacity that's built into the system, and we feel like that capacity is what we need to drive innovation going forward. And so we're comfortable that R&D will continue to grow, but grow at a reasonable pace, and continue to drive leverage across the business. And we're very comfortable with the margin progression that we're talking about for the full year. And we're comfortable about the margin progression to our targets of getting to the mid 40s over time. You got it.

Bryan: Meaningful step up in capacity, that's built into the system and we feel like that capacity is what we need to drive innovation going forward until we're comfortable that R&D will continue to grow.

Bryan: But grow at a reasonable pace and continue to drive leverage across the business and we're very comfortable on the margin progression that we're talking about for the full year and we're comfortable about the margin progression.

Bryan: Two our targets of getting into the mid <unk> over time.

Christopher Paul Moore: I appreciate it. I'll leave it there. Thanks, Chris. Thank you. One moment for the next question. Our next question will be coming from Gabriela Borges of Goldman Sachs. Your line is open.

Speaker Change #159: Got it I appreciate it I'll leave it there.

Speaker Change #160: Thanks, Chris.

Speaker Change #161: Thank you one moment for the next question.

Speaker Change #162: Our next question will be coming from Kemper yellow organs of Goldman Sachs. Your line is open.

Gabriela Borges: Hi, good afternoon. Thank you. Githesh and Brian, I wanted to ask the new logo question in a couple of different ways. The first part is about the success that you're having in the repair shop community. Remind us how to think about penetration there and what the limiting factor is for the number of new logos that you can get in any given year within that ecosystem, given there's a little bit of a network effect as you run. Yeah. Hey, Gabriela. So the way we look at the shop network is about 40,000 repair shops that are kind of the marketplace. Today, we have 29,500.

Speaker Change #163: Hi, good afternoon. Thank you.

Speaker Change #164: Good question Brian.

Speaker Change #165: Any level question and a couple of different ways.

Speaker Change #166: The first part is around the success that you're having and community.

Speaker Change #167: Community remind us how to think of that penetration and what the limiting factor.

Speaker Change #167: Number of new logos that you can get.

Speaker Change #167: Yeah, Nathan given last a little back of the network effect.

Brian Herb: We've been adding, if you look back over the past several years, about 1000 net new logos a year. And we continue to see that pacing and are very comfortable with that pacing for the year and in the near term. So really good momentum; we continue to see strength in new logo adoption at the shop. That's helpful. And the second part of the New Libra question is, in the past, when you've talked about expanding overseas, it's been with a lens towards M&A. So my question to you is, what is the limiting factor to expanding New Libras overseas organically?

Nathan: Yeah, Hey, Gabriel.

Nathan: The way we look at the shop network is about 40000 repair shops that are is kind of the marketplace. Today, we have 29500 <unk>.

Nathan: Been adding if you look back over the past several years about a 1000 net new logos a year.

And we continue to see that pacing and very comfortable with that pacing.

Nathan: For the year and in the near term so really good momentum continuing to see strength.

Nathan: And new logo adoption.

Nathan: At the shops.

Speaker Change #169: That's helpful and then the second part of that question.

In the past when you've talked about expanding the scene.

Speaker Change #169: Dean with a lens towards M&A.

Speaker Change #169: My question to you is what if we will have any facts ups and expanding.

<unk> organically and maybe you can give us an update.

Speaker Change #169: Asking why do you think the timing might be right come more aggressive with M&A and expanding internationally. Thank you.

Gabriela Borges: And maybe give us an update as to when you think the timing might be right to become more aggressive with M&A and expand internationally. Thank you. Hey, Gabriela, this is Gitesh. I just want to say that, you know, our first priority when we look at M&A domestically is to look at the opportunities we have for expanding our product set. For example, with subrogation, if you remember, you know, a little over, it's been almost about two years now.

Speaker Change #170: Hey, Gary I'll, let us just say that.

Speaker Change #172: Our first priority when we look at M&A.

Speaker Change #171: As the domestic.

Speaker Change #173: Is to look at the opportunities we have in expanding our product set for example, with subrogation, if youll remember a little over it's been almost about two years now.

Gary: That was a great example, where we took a fantastic team and then.

Githesh Ramamurthy: And that was a great example where we took a fantastic team and then really built that out. And, you know, those kinds of expansions we look at. On the international front, we are not at this stage that, you know, we continue to spend time looking at it, both in terms of Europe and China. We're already in China, as you know, but not a major focus right now, in terms of international, Unlisted.

Gary: Really built that out and.

Gary: <unk>.

Gary: Those kinds of expansions, we look at on the international front, we are not.

Gary: At this stage that is that we continue to spend time looking at it both in terms of Europe, we are already in China as you know.

Gary: But not a not a major focus right now in terms of international.

Speaker Change #174: Thank you.

Gabriela Borges: Thank you. Thank you, everyone. Thank you. Thank you for your question. There are no more questions in the queue, and I would like to turn the call over to Githesh for closing remarks. Please go ahead.

Speaker Change #175: Thanks Deborah.

Thank you.

Speaker Change #176: Thank you for your question there on Jamar questions in the queue I would like to turn the call over to <unk> for closing remarks. Please go ahead Sir.

Githesh Ramamurthy: Thank you all for joining us today. I'd just like to thank our customers, our CCC team members, and our shareholders for a great start to 24. And, as you hopefully saw, the durability of our business model continues to come through. We remain confident in our ability to deliver on our strategic and financial objectives while helping our customers and investing in future solutions at the same time. We look forward to talking to you again in late July when we report our second quarter results, if not sooner. Again, thank you so much for your continued interest and your support of CCC. This does conclude today's conference call. Thank you for your participation. You may all disconnect.

Speaker Change #177: Thank you all for joining us today I'd, just like to thank our customers our CCC team members and our shareholders.

Great start to 'twenty four.

Speaker Change #178: And as you hopefully saw the durability of our business model continues to come through we remain confident in our ability to deliver on our strategic and financial objectives, while helping our customers and investing in future solutions at the same time, we look forward to talking to you again in late July when we report our <unk>.

Speaker Change #178: Quarter results, if not sooner again. Thank you so much for your continued interest and your support of CCC.

This does conclude today's conference call. Thank you for your participation you may all disconnect.