Q1 2025 CCC Intelligent Solutions Holdings Inc Earnings Call
Franz Schreiber's Home Priya's Love © transcript Emily Beynon
Good day and thank you for standing by.
Speaker Change: Welcome to the CCC Intelligent Solutions First Quarter Fiscal 2025 Earnings Call. At this time, all participants are in Listen Only mode.
After the speaker's presentation, there will be a question and answer session.
Speaker Change: 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 your hand is raised. To withdraw your question, please press Star 11 again. We kindly ask that you limit yourself to one question and one follow-up. You will need to press Star 11 again. We kindly ask that you limit yourself to one follow-up.
Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Bill Warmington, Vice President of Investor Relations. Please go ahead.
Bill Warmington: Thank you, operator. Good morning and thank you all for joining us today to review CCC's first quarter 2025 financial results which we announced in the press release issued before the open of the market today. Joining me on the call are Githesh Ramamurthy, CCC's Chairman and CEO , and Brian Herb, CCC's CFO .
Bill Warmington: 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 very materially. [inaudible]
Bill Warmington: These risks are discussed in the earnings releases available on our Investor Relations website and under the heading risk factors in our 2024 annual report on form 10K file with the SEC.
Bill Warmington: Further, these comments in the Q and A that follows are copyrighted today by CCC Intelligence Solutions, Holdings Incorporated.
Bill Warmington: Any 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 the United States copyright and other laws [inaudible]
Bill Warmington: Additionally, while we will provide transcript of portions of this call and we've approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in the transcripts.
Bill Warmington: Please note that the discussion on today's call includes certain non-GAAP financial measures as defined by the SEC.
Bill Warmington: 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.
Bill Warmington: A Reconciliation of Gap 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 Githesh. Thank you Bill and thanks to all of you for joining us today.
and pleased to report a solid start to 2025. Bye-bye.
Githesh Ramamurthy: CCC delivered another quarter of strong top and bottom line results.
reflecting the predictability and profitability of our business.
Githesh Ramamurthy: In the first quarter of 2025, CCC's total revenue was $252 million, growing 11% year-over-year, exceeding our guidance range and crossing the $1 billion revenue run rate threshold for the first time.
Speaker Change: Adjusted EBITDA was $99 million, also ahead of our guidance range, and adjusted EBITDA margin was 39%. On today's call, I would like to cover three themes. The first is how we help our clients manage complexity in an increasingly uncertain world.
Speaker Change: The second is how our clients are increasingly committing to CCC as their core long-term innovation platform.
Speaker Change: And third, the continued progress and proofpoints in adoption of our newer solutions.
Speaker Change: In terms of my first topic, you heard me speak on prior calls about the many operational challenges that rising complexity poses for our customers.
Speaker Change: There are numerous examples of this, including growing vehicle complexity, labor and skilled shortages, medical cost inflation, natural disasters, changing regulations, and more.
Speaker Change: Fundamentally, our solutions help our customers navigate these complexities so they can efficiently operate and grow their businesses and provide a seamless consumer experience.
Speaker Change: We do this by leveraging real-time, hyper-local data, a highly interconnected ecosystem and deeply integrated AI-powered workflows powering our customer's operations.
A good illustration of this.
is a current macroeconomic environment. [inaudible]
Speaker Change: For example, while each customer is unique, they all share a common challenge in navigating the increased complexity arising from heightened volatility and uncertainty in vehicle and park-spricing and availability.
Our Recent Plan Meeting Show [inaudible]
Speaker Change: There's an even greater intensity with which they are seeking tools, data and insights to help them effectively manage these rapidly changing variables that impact their near and long-term decisions and operations.
We believe CCC is uniquely able to deliver this support. [inaudible]
Speaker Change: That starts by providing visibility to real-time, hyper-local data on fluctuating prices, parts availability, use vehicle values, and many other decision inputs.
Speaker Change: Across the entire country and even down to a single plane. Using that intelligence, customers can use our platform to rapidly and flexibly shift their operations with their partners in the CCC ecosystem, staying in sync.
Speaker Change: and they can do this in line with their existing systems and operations with AI-enabled workflows driving increased efficiency and productivity so they can stay ahead of the curve.
Speaker Change: and through our unique industry-wide benchmarking data, they can make sure they really are.
This dynamic creates a virtuous cycle where increased customer collaboration.
Speaker Change: drives demand for additional solutions and is just one example of how we're helping our customers navigate the increasing complexity in the insurance economy.
Speaker Change: Another is the ongoing economic sensitivity of the US consumer and the cumulative impact of inflation.
Speaker Change: which has contributed to a more than 50% increase in auto-insurance premiums. [inaudible]
Speaker Change: since March of 2020. Across multiple dimensions, we have seen consumers seek to lower their costs and avoid potential future rate increases.
They are raising deductibles and reducing coverage
Smaller claims are going unfiled and insurance shopping is up.
Speaker Change: This puts even more pressure on insurers and repairs to deliver a modern, best-in-class customer experience but also creates the risk of unrelated prior damage showing up in future claims and repairs.
Speaker Change: Both areas that we believe CCC is uniquely positioned to address.
Speaker Change: These factors, combined with falling consumer confidence overall, contributed to a continued decline in filed auto-physical damage or APD claims in Q1.
Down 9% year-over-year. [inaudible]
Speaker Change: As Brian will discuss shortly, we expect this dynamic to keep claim volumes under pressure for the remainder of 2025.
Speaker Change: while this will have a modest near-term impact on our revenue.
Speaker Change: We have seen this pattern of up and down fluctuation followed by normalization play out in various forms over the past two decades.
Speaker Change: My second theme is how our clients are increasingly committing to CCC as a core long-term innovation platform.
Speaker Change: This is leading to continued strength and growth opportunities in our established solutions.
Speaker Change: For multiple decades, we have invested a head-of-the-technology curve to drive innovation in our market-leading solutions.
Speaker Change: Our core established products deliver proven bottom line results that customers rely on as the basis for the claims and repair operations.
Speaker Change: These solutions have significant white space for growth and importantly form a seamless, highly scalable foundation for emerging products.
Speaker Change: Climes are increasingly demonstrating that trust in CCC as their long-term innovation platform because of the strength of our established solutions.
and the gateway they provide to additional next-generation capabilities.
Speaker Change: There a new element expansion of our long-term contract with caliber collision last month is a good example of our strategic role within the auto insurance economy and how our core established solutions continue to create growth opportunities for both CCC and our clients.
Speaker Change: Since his farming in 1997, caliber has been very forward thinking in its application on new technologies and was an early adopter of CCC's workflow and direct repair solutions.
Speaker Change: Caliber is the largest multi-store operator in the United States with over 1,800 locations across 41 states and on a strong growth trajectory.
Speaker Change: Calibur has been a terrific partner and we are excited to provide them with additional capabilities to support their future growth.
Speaker Change: In addition to extending their overall use of the CCC-1 platform, Caliber will also be adding CCC diagnostics workflow and CCC build sheets to help streamline operations and enhance services across its repair facilities.
Speaker Change: In Q1, we also sign a large new account, an OEM with a captive insurance business and a leading marketing position in EVs.
Speaker Change: It's important to note that this new relationship is with both the insurance and the collision repair sides of the business, reflecting the value of our multi-sided network.
Speaker Change: We think this OEM's decision to embrace CCC as its long-term innovation platform by rolling out our core solutions is significant because it is a proof point that new disruptive business models
Speaker Change: Are choosing to partner with us due to the strength and functionality of the CCC platform.
Speaker Change: In addition to the use of our tools in its captive insurance operation, this OEM also has several hundred repair facilities in its certified repair program.
Speaker Change: We believe the caliber renewal and the OEM win demonstrate the continued foundational value of CCC solutions for leading industry players in the long runway for growth of our core solutions in our existing markets.
Speaker Change: With an insurance overall, we completed multiple renewals and expansions with existing clients in autophysical damage along with multiple new contracts and renewals in casualty in the first quarter.
Speaker Change: We continue to believe casualty is one of our biggest growth opportunities with the potential to be multiple times its current size and over time possibly as large or even larger than our current insurance APD business.
Speaker Change: Casualty costs are climbing across the board and outpacing general healthcare costs due to notable increases in outpatient surgeries and diagnostic procedures such as CD scans and MRIs.
Speaker Change: Our platform, as well as the insights and connectivity to the physical damage side of the accident, only CCC can deliver, provide unique capabilities to help our customers manage these complexities.
Speaker Change: We also continue to see durable expansion and growth in our automotive business as we continue to add new repair facilities and expand the depth of our CCC-1 cross cell.
Speaker Change: The volume of electronic parts ordering through CCC-1 is also continuing to rise with 10% year-over-year growth in the first quarter with a significant remaining portion of order volume yet to be converted.
Speaker Change: My third theme is a continued progress and proof points in the adoption of our new solutions. In addition to a strong ongoing demand for established solutions, we continue to see solid demand and progress in the adoption of our newer solutions.
Speaker Change: That reinforces our confidence in the market opportunity for these new products.
Speaker Change: We have multiple top 20 insurers seeing significant improvements in their operating efficiency using our intelligent APD suite and also have multiple top 20 insurers starting to generate revenue using our AI-powered subredation solution.
Speaker Change: Now moving to Evolution IQ, the integration of our newest AI-powered business is going well.
Speaker Change: When we announce the acquisition in December , a key part of our investment thesis.
Speaker Change: was the opportunity to add Evolution IQs, AI-powered injury claims or resolution capabilities to our auto-casualty suite, positioning us to build on our already strong momentum in casualty.
Speaker Change: Last week, due to the tremendous dedication and collaboration of our teams since the acquisition,
Speaker Change: We are pleased to announce the faster than expected introduction of Medhab for auto casualty, which we plan to launch in the third quarter Medhab will be integrated into CCC's casualty suite of solutions
Speaker Change: with the aim of providing faster, better informed claims decisions and is the first of several planned innovations with Evolution IQ.
Speaker Change: MedHop is evolution IQs, AI-powered medical synthesis technology that is able to help claims professionals make sense of complex medical documentation.
Speaker Change: Manhabas built an impressive track record of success in other lines of insurance with customers reporting more efficient review processes, more accurate summarization output, and better targeted use of specialists on planes.
Speaker Change: AI-powered medical record synthesis is particularly well-suited with third-party casualty because casualty insurers typically receive a large demand package including hundreds or even thousands of pages with continuous updates.
Speaker Change: and a given claim professional may be juggling hundreds of such claims. We believe that by leveraging Evolution IQs AI-based technologies in medical summarization.
Speaker Change: And in the future, best next action recommendation engine, we can deliver a step change impact in casualty, the way we have in auto fiscal damage, and Evolution IQ has in disability.
Speaker Change: Evolution IQ continues to see strong momentum in its core disability business and is also seeing robust adoption of its workers' compensation suite.
Speaker Change: Seven of the top ten workers' compensation PNC insurers are also existing CCC auto insurance clients.
Speaker Change: and we believe those existing relationships combined with the bottom line results, Evolution IQ's Worker's Compensation Customersary Experiencing provide another large and attractive runway for growth.
Speaker Change: Let me conclude by saying that we are excited about the opportunity to help our clients [inaudible]
Speaker Change: Navigate the rising complexity in their business and by their growing commitment to CCC as their core innovation platform for established and emerging solutions.
Speaker Change: We remain confident that the global insurance economy is still at the early stages of a generational digital upgrade cycle, and that CCC is a well-positioned to help our customers navigate this transition.
Speaker Change: I will now turn the call over to Brian . We'll walk you through our results in more detail.
Brian Herb: Thanks, Githesh. As Githesh highlighted, Q1 was a solid start of the year that included significant renewals, contract expansions and new logo wins. Reflecting positive momentum in the core business as well as our newer solutions.
Speaker Change: Now let's turn to the numbers. I'd like to review our first quarter, 2025 result, and then provide guidance for the second quarter in the full year of 2025.
Speaker Change: Total revenue in the first quarter was 251.6 million, which is up 10.7% from the prior year period.
Speaker Change: In the first quarter of 2025, approximately 4% of points of growth was driven from cross-cell upsell and the adoption of solutions across our client base, including repair shop upgrades that continued adoption of our emerging solutions, casualty and other ecosystem customers.
Speaker Change: Approximately three points of growth came from new logos, mostly from repair facilities and parts suppliers, and about four points of growth came from evolution ITU.
Speaker Change: In the quarter, contribution from emerging solutions is now rounding up to two points of growth.
Speaker Change: Mainly driven from diagnostics, build sheets, and estimate STP. Emerging solutions represent about 4 percentage points of our total revenue in Q1 in 2025, and these solutions continue to be the fastest growing portion of our portfolio.
Speaker Change: This solid performance was despite approximately one percentage point of headwind from lower claim volumes into one.
George E. Matrix
of Software Growstallar Attention, or GDR. [inaudible]
Speaker Change: and Software from Net Dollar Retention, NDR. Please note that both these metrics now include Evolution IQ.
Speaker Change: We are using an annualized software revenue on a combined basis.
for the prior year. [inaudible]
to provide a prior baseline. [inaudible]
for annualized revenue growth. [inaudible]
Speaker Change: GDR captures the amount of revenue retained from our client base compared to the prior year period. In Q1 2025, our GDR was 99% which is in line with the last five quarters.
Speaker Change: Note that since the first quarter of 2020, our GDR has been between 98% and 99% and it has either surrounded up or down primarily driven by repair shop industry chair.
Speaker Change: We believe that GDR reflects the value we provide and the significant benefits that accrued our customers from participating in the broader CCC network. Our strong GDR is a core tenant to our predictable and resilient revenue model.
Speaker Change: NDR captures the amount of cross-cell upsell from our existing customers compared to the prior year period, as well as volume movements in our auto-physical damage client base. In Q1 2025, our NDR was 107.
Speaker Change: This is up from 105 in Q4 2024. Evolution IQ contributed almost two points to NDR in the quarter.
Speaker Change: Now I'd like to turn to the income statement in more detail. As a reminder, unless otherwise noted, all methods are non-GAAP . We provide a reconciliation to gap and non-GAAP in our press release. But Justin Gross' profit in the quarter was $192 million. Gross' profit margin was 77%, which is up from 76% last quarter and down slightly from 78% in Q1 2024.
Speaker Change: The Lower Adjusts Gross Prophet Margin, versus Q1 of 2024, primarily reflects increase in depreciation expense from capitalized projects recently played into service. This was partially offset by modest accretion from evolution IQ. Overall, we feel good about the operating leverage and the scalability of the business.
Speaker Change: and our ability to deliver against our long-term adjusted growth profit margin target of 80%.
Speaker Change: In terms of expenses, adjusted operating expense in Q1 2025 was 107 million, which is up 15% year over year, primarily driven by resource-related costs, including the addition of Evolution IQ. Excluding Evolution IQ, adjusted operating expense was up 6% year over year.
Speaker Change: Adjusted EBITDA for the quarter was 99 million, up 6% year-over-year, within adjusted EBITDA margin of 39%.
Speaker Change: Now it turns into the Balanchini cash flow. We ended the quarter with 130 million cash and cash equivalent.
Speaker Change: In about 1 billion of debt, at the end of the quarter, our net leverage was 2.2 times adjusted EBITDA.
Speaker Change: Free cash loan Q1 was $44 million compared to $40 million in the prior year period, which is up 10% year over year including modest delusion related to transaction costs.
associated with the Evolution IQ acquisition.
free cash flow on a trailing 12-month basis.
Speaker Change: It's 235 million, which is up 9% year over year. A 12 month free cash flow margin in Q1 2025 was 24% consistent with Q1 of 2024. Law of free cash flow level will vary quarter to quarter. We do expect to continue to trend up over time.
Speaker Change: As far as use of free cash flow, I did want to highlight that we repurchased 7 million shares of CCC stock for 72 million in Q1 under our previously announced $300 million share repurchased program.
Speaker Change: On now, cover guidance beginning Q2 2025, we expect revenue of 255.5 million to 257.5 million, which represents 10 to 11% growth year-over-year. We expect a gestive beta of 99 million to 101 million, a 39% of gestive beta margin at the midpoint.
Speaker Change: For the full year 2025, we are modestly reducing our full year outlook. We are now expecting total revenue of 1.046 billion to 1.056 billion, which is 11% year over year growth.
At the midpoint, we expect CCC's core revenue growth [inaudible]
Speaker Change: in the year to remain at the low end of our long-term guidance of 70-10% and for Evolution IQ to contribute between 45 and 50 million in revenue in 2025, which is consistent with what we discussed when we announced the transaction back in December . For just a EBITDA, we expect $420 million to $428 million, a 40% of just a EBITDA margin at the midpoint, which includes absorbing a moderate EBITDA loss from Evolution IQ to 3 points to keep them eyeed to...
Speaker Change: I think about the Q2 and Collier guidance for 2025. The first point is that uncertainty in the current macroeconomic environment is creating two potential moderate near-term headwinds for the business. [inaudible]
Githesh Ramamurthy: One coming from claim volumes in the second client buying behavior. As Githesh mentioned earlier in his remarks, we believe that consumer economic sensitivity is impacting auto insurance claim volumes.
Githesh Ramamurthy: about 20% of our revenue is tied to volumes, though the direct revenue impact can vary depending on solution and client mix.
Githesh Ramamurthy: From a sales perspective, we continue to see strong demand momentum in our solution set, as Githesh referenced earlier, at the same time we believe the increased uncertainty related to the evolving macroeconomic fire makes it prune to assume that sales and implementation cycles in 2025 may be longer than initially expected.
Githesh Ramamurthy: The combination of these two factors have led us to reduce our 2025 revenue growth guidance by about one percentage point.
Githesh Ramamurthy: The second point is that we've raised our full year 2025 at Destiny Bank Guidance midpoint from 422 million to 424 million and increased our evadom margin guidance from 39 to 40% to 40 to 41%.
Githesh Ramamurthy: Excluding the approximately 200 basis point drag from Evolution IQ Margin.
Githesh Ramamurthy: Expansion for CCC is trekking towards our year-over-year target of 100 basis points.
Githesh Ramamurthy: We remain focused on investing in innovation and also driving operational efficiency that will drive margin progression over time because we continue to feel good about our long-term margin target. Third point is stack-based compensation. In Q1, stack-based compensation was 24% of revenue.
Githesh Ramamurthy: As we unpack this figure, there are three component parts of it. The first is CCC vesting shares which are expected to be about 12% of revenue for the year. This is coming down from 18% in 2024. The second is the new shares granted to Evolution IQ as part of the transaction.
Githesh Ramamurthy: We believe this grant was important strategically for retention and alignment in creating long term value for shareholders. For the year, this is about 3% of revenue. These two items make up the 15% stock base comp as a percentage of revenue for the full year that we highlighted on our last call.
Githesh Ramamurthy: The third component relates to acquisition considerations. Some of the equity from the transaction for key evolution IQ management is on investing schedule linked to employment over a two year period. Within this structure, a portion of the equity is being treated as compensation and not purchase price.
Githesh Ramamurthy: As a result, the purchase price is 46 million lower than we previously talked about, and the share-based cop is 46 million higher.
Githesh Ramamurthy: Which increases share-based competence percentage revenue by two percentage points per year for the next two years?
Githesh Ramamurthy: This takes the full year position for 2025 to approximately 17%. The phase of 17% is front loaded with a peak of 24% Q1 and then it moderates through the year and reaching the low teens by the end of the year.
Githesh Ramamurthy: While the current macroeconomic environment is creating some near-term uncertainties, we believe ultimately it reinforces how we can assist our customers with their digital transformation and AI-based solutions.
Githesh Ramamurthy: As we help our clients navigate these complexities, we remain confident in our business model and our ability to deliver against our long-term strategic priorities and to create long-term value for both our customers and our shareholders. With that operator, we are now ready to take questions. Thank you.
Githesh Ramamurthy: Thank you. At this time we will conduct the question and answer session. As a reminder to ask a question you will need to press star 1-1 on your telephone and wait for your name to be announced.
Githesh Ramamurthy: We kindly also remind you and ask you that you limit yourself to one question and one follow-up. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from Dylan Becker from William Blair. Your line is now open.
Dylan Becker: Hey gentlemen, appreciate the question. Maybe Githesh, starting with you, you kind of called out some of the dynamics in the ecosystem today, particularly on the claims environment, but wondering how maybe you see that recovering as carriers look to drive kind of greater visibility into the claims process.
Dylan Becker: How that can flow through to achieving equilibrium on the premium side of the equation more efficiently, more effectively, and maybe sparks some of that kind of normalization from a volume trend perspective.
Dylan Becker: Sure, so first just to give kind of a much broader perspective, or the last 20 years or so we have seen claim volume, you know, in over 20 year time period.
Dylan Becker: Go up, go down, and generally it's been running in that range for a long period of time with small periods in between.
Dylan Becker: And as a result, our solutions give you a tremendous amount of, you know,
Ability to focus not just...
on...
Dylan Becker: The number of claims, but each claim has many different aspects to it So if you think about our core algorithm for growth, we are addressing more and more and more components of the claim
Dylan Becker: So the actual impact of this is much minor on our business. Part of the reason is mostly subscription versus transaction.
Dylan Becker: Take Place or Accident Frequency continues to take place, but other data that we're watching show that it is fundamentally an issue of claims not being filed versus claims not happening. [inaudible]
Dylan Becker: Okay, great. Okay, yeah. So fair to say, again, your ability to kind of drive precision in that process should help them kind of normalize over time as well too. Okay, I think that's fair. Maybe for Brian , you called out...
Dylan Becker: We talked about the value of the platform, the tangible value of the network, in this period of uncertainty how you're thinking of that opportunity to sell ROI as an enabler of sustained momentum.
Dylan Becker: I think you've called out the emerging solutions, having stepped up as well to maybe kind of try and do later reconcile the ROI of emerging and how that's kind of flowing through to the business model here. Thank you.
Dylan Becker: Yeah, happy to, Dylan. Yeah, I mean, the point of selling on ROI is a basis of how we operate. So this is in a new thing. This is a consistent approach and so our...
Our solutions are all ROI-based. [inaudible]
Dylan Becker: and so it certainly plays through in the newer solutions when we talk about estimate SCP, when we talk about subrogation.
They are driven off hard ROI metrics.
Dylan Becker: that we show the clients, and then we price based off those ROI. So it's a process and a methodology that we've had in place for a while. Certainly the new solutions are rooted in that.
Dylan Becker: and we do expect that to continue to help drive momentum across the business, especially in the macroeconomic conditions. We're seeing really good demand for these ROI solutions.
Great. Thank you both. Appreciate it. Thank you.
Thank you.
Speaker Change: Our next question comes from Kali Valente from Goldman Sachs, your line is now open.
Callie Valenti: Hey, thanks for taking my question and I really appreciate all the detail in the call. I wanted to ask a follow-up on the claims volumes topic, curious what you've seen in previous cycles of claims weakness, like typically how long do you see these weaker claims volumes last and how is this particular cycle kind of the same or different from what you've seen in the past? [inaudible]
Speaker Change: Yeah, I would say, you know, the period can last anywhere from a year to two years. We've seen those cycles. What is interesting about this cycle is what is the underlying causes driving it. I'll give you a couple of data points.
Speaker Change: So, what we have seen is that, you know, if you look back at 2020, 40% of claims filed were below $2,000. In 2025,
claims below $2,000 are only 25% [inaudible]
Speaker Change: Yes, claims goths have gone up, but what we are seeing? [inaudible]
Speaker Change: because of the risk of either coverage being dropped or premiums going up. So that is so as a result consumer cell pays increasing slightly but the underlying that is really what we see as the underlying dynamic.
Speaker Change: And that's why we believe some of this should normalize over time.
Speaker Change: Yeah, that makes a lot of sense. Thank you. And then, gradually the progress with emerging solutions getting to that two points of growth. As you look at the full year, any change in your expectations for contribution and out of the three emerging solutions you called out, do any in particular surprise you to the upside in the quarter? Thank you.
Speaker Change: Yeah, we've talked about in the past few quarters, emerging has been rounding to one, and now we've seen the momentum and progress, it's now rounding up to two.
It is...
Speaker Change: It's not a full point. It's important to note that it's it's incrementally we're making progress on it and now as I said it's it's running to two. Let's do it.
Speaker Change: It was broad-based. It came from build sheets, diagnostics, estimate STP, subrogation.
Speaker Change: All those contributed to the step up and we're seeing as we look forward we do continue to see this strength play out for the balance of the years. So we're feeling good on the progress and momentum that we're seeing across the emerging solutions set.
Thank you. Appreciate the detail. Thank you.
Yep, thanks Kelly.
Thank you.
Speaker Change: Our next question comes from Alexei Gogolev from JP Morgan, your line is now open.
Speaker Change: Hello everyone, Brian Kinnick confirmed who was organic growth in...
Speaker Change: and Q1. So, with a 10.6-4 percentage points from evolution IQ.
Speaker Change: Yeah, that's right. I mean, we highlighted that Evolution IQ drove four points of growth in the quarters for the balance.
Speaker Change: is CoreCCC. So we were at the lower end of our long-term target, but yeah, you're reading it right on the breakdown between Evolution IQ and the Core.
Githesh Ramamurthy: Great. Thank you. And Githesh, following up on the discussion about clean volumes, can you remind us where is currently the share of self-cleaned...
Repair by Consumers.
Githesh Ramamurthy: Yeah, I mean, we try to piece this data together, it's not a perfect science.
Githesh Ramamurthy: 25% when we look at the repair site of our data set, consumer self pay is about 25% so when you dial the clock back about three years ago, consumer self pay was probably closer to 11 or 12% so it has increased.
Githesh Ramamurthy: So we are seeing that increase and then what we're seeing is with our repair facility because two customers in particular
Githesh Ramamurthy: The use of engaged and our website tools and all of those tools, they're starting to deploy those tools more and more to capture more of the business that is consumer self pay. And then on the insurer's side obviously we don't see the data because those claims aren't being filed. [inaudible]
Does that help, Alexei? [inaudible]
It does, it does, thank you very much.
Thank you.
Speaker Change: Our next question comes from Kirk Materne from Evercore ISI. Your light is now open.
Speaker Change: Alright, this is Noah for Kirk, and thanks for taking my question. Well, if a small part of the business, can you talk about whether tariffs could potentially have any impact on the parts suppliers part of the business?
Speaker Change: Sure, so first and foremost, what has happened as a result of tariffs is that across the board, whether it is insurers, repairers, parts providers, and particularly our OEM customers, who are increasingly using adopting more and more CCC solutions.
Speaker Change: We're being asked a lot of questions and we've been able to look at the data set and try to predict and try to provide a lot of insights across our customer base.
Speaker Change: in terms of what are the expectations and the flow-through impact of tariffs.
Speaker Change: on OEM parts prices, aftermarket prices, recycled parts and alike.
Speaker Change: It's still very very early days but we've increased the monitoring and the tool set on all of this for our customers and are engaging more deeply.
Speaker Change: Now, when it comes to the CCC business model itself, it has virtually minimal or no impact because as you know...
Speaker Change: All our revenue is really, you know, the vast majority is subscription-based and there's about a 50-20% component that is, you know, frequency dependent.
Speaker Change: Great. And then regarding MedHub, do you have any stats around what the learning curve is and the increase in efficiency that people see when they're using it?
Yes, I would say it is… [inaudible]
Speaker Change: So, first and foremost, it has a tremendous ROI. Bye.
Speaker Change: in terms of what it can deliver. And we are seeing combined ratio impact of using Madhub, you know, in the low single digit points, which is pretty significant.
Speaker Change: and also there's an LE impact or an efficiency impact for customers. [inaudible]
Speaker Change: and that efficiency impact can be significant as much as, you know, 20 plus percent impact.
Speaker Change: So there's a range of those efficiencies but most importantly, Medhab is a synthesis tool which takes very very complex medical procedures and all of those things.
Speaker Change: and that's really, you know, in our early conversations with CCC casualty customers, workers' compensation customers, there's a lot of excitement about wanting to work with us on deploying MedHop.
because of those two. Great. Take a mic. Thanks.
Thank you.
Thank you.
Speaker Change: Our next question comes from Saket Kalia from Barclays. Your line is now open.
Speaker Change: Okay, great. Hey guys, thanks for taking my questions here and appreciate all the data.
Yeah, absolutely. Catch me.
Githesh Ramamurthy: Yeah, for sure. Githesh, maybe for you just to stay on the topic of claims.
Speaker Change: You know, you've been clear in saying that this is cyclical and eventually will normalize, but just to make sure the question is asked
Speaker Change: What data points do you maybe look at to get confidence that claims volume isn't being impacted by other things like ADAS, for example, or any other exogenous factors? We just love your view there.
Speaker Change: Yeah, look, the bottom line is, you know, the data isn't perfect [inaudible]
Speaker Change: because we do look at all the vehicles that are...
Speaker Change: that have ADAS of different kinds and we can correlate cars with different ADAS features and claims.
Speaker Change: We look at consumers whose deductibles have gone up, we're not really filing the claims, we're also seeing that piece of the data, we're seeing distracted driving increase, so there's a lot of different factors that are going into the mix.
Speaker Change: And the most important point, Saket, is we are not as dependent as a business on underlying frequency. Yes, it does have an impact for us this year, but when you look at this business over multiple years,
Speaker Change: Claim volume, for example, if I go back for the last five years, claim volume hasn't materially changed but our revenues have increased about 60% or so in the last four or five years.
and the...
Speaker Change: You know, as salvage yards and tow trucks and you get all of the consumer data up front, whether it's subrogation or casualty that opens up, you know, a whole different side of the auto claim or electronic parts ordering or, you know, other components of it.
Speaker Change: So there's a vast amount of efficiency across the entire claims life cycle.
Speaker Change: So, you know, that is really the vast majority of what we're focused on. And we do think, you know, the data that I was referring to earlier, I'll give you one other stat that you may find interesting, that if you look at the number of cars that are less than six years old,
Today there are 9 million fewer vehicles.
in 20, you know, that are...
Speaker Change: Six years or newer compared to what it was a few years ago. [inaudible]
Speaker Change: So you've got a number of these different factors coming in altogether. So it's not a perfect science but given our pattern over the last 20 years
Speaker Change: And then the way we are focused on delivering across all aspects of the claim is what gives us comfort that we can continue to build and grow the business.
Brian Herb: Absolutely, that's very helpful context. Brian , maybe for my fall-up for you.
Brian Herb: You know, I think incorrect me here from wrong but I think I think the full year revenue was getting trimmed by about 9 million at the at the midpoint.
Brian Herb: How much of that is coming from lower claims volume versus longer sales cycles?
Brian Herb: And then, Saket Hesh's point earlier, obviously the vast majority of this business is coming from subscription, you know, fixed fee type of contracts.
Those sort of types of contracts down the road.
Thank you [inaudible]
Speaker Change: Yeah, so the first question in it was around the trim of the guide. We saw a point of headwind in revenue in Q1 based on the lower claim count. We are taking that through the balance of the year, so we're assuming that one point of...
Speaker Change: Edwin will continue through the balance of the year. So that's the largest driver of the reduction. The second point is around just macro uncertainty that potentially could impact the velocity of new business for the balance of the year.
Speaker Change: At this stage, we continue to see strong demanding good engagement at the top of the funnel. However, with macro uncertainty, we're just being prudent and cautious that it could provide further risk.
Your second question around structural growth. Let's go.
Speaker Change: and related to claims. I mean, as Githesh said, we feel really good on the long-term guide and the position we have. We have the breadth of the portfolio continues to build and broaden. We're seeing emerging, continue to scale, as we talked about going from one point. [inaudible]
of Growth Contribution to two points. [inaudible]
Speaker Change: The business model we really focus on is a subscription business model.
and our technology impacting...
Speaker Change: Each claim more and more, so it's less about the number of claims, but it's more about our attachment rate to each claim across the portfolio and the solution set that we put into the market. So that's really how we think about the long-term growth algorithm in the business.
Speaker Change: Very helpful guys. Thank you. All right, Techett, thanks. Thank you. Thank you.
Speaker Change: Our next question comes from Samad Samana from Jeffries, your line is now open.
Speaker Change: Hey guys, this is Jeremy on First Amod. Thanks for taking my questions.
Speaker Change: So there's been a lot of questions on the claims volume that have impacted the ADP business.
Speaker Change: Can you maybe help us understand the demand elasticity of the evolution IQ and casualty business? Are there any metrics you look at that might help us understand how this business could be influenced by any change in consumer spending or the kind of the players in the ecosystem or there's a similar impact that might occur? No.
Sure, the evolution IQ business. [inaudible]
Speaker Change: Short term disability, long term disability is really not no correlation to auto, to the auto frequency. The other growth area for Evolution IQ is workers compensation and workers compensate in workers compensation.
Speaker Change: Seven of our existing CCC customers also happened to be some of the largest workers insurers in the country.
Speaker Change: and Evolution IQs, Workers' Conf solution affects, you know, goes directly towards them. And again, that's not correlated to auto.
is that it gives us a lot of opportunity. [inaudible]
Speaker Change: to really build out our casualty solution. As you know, we have stated publicly multiple times.
Speaker Change: that we are seeing significant momentum in casualty and the CCC casualty solution is connected directly to auto and we are seeing significant growth in that business as we bring on more customers.
Speaker Change: The number of casual decustomers we have is a small fraction of what we have in auto-fiscal damage, so we see that growth.
And then...
To turbocharge that a little further. [inaudible]
Speaker Change: That's why we're very excited that the teams have been able to accelerate Medhab, which is a generative capability that can take deep, deep knowledge of medical procedures and the like [inaudible]
and have an impact on casualty. [inaudible]
Speaker Change: So that's why we're excited about that. Does that help you? Maybe Brian ? Yeah, I just had two things. I mean one other point is to highlight is it's it's
Speaker Change: Not as similar to auto. I mean, these are not discretionary claim filing when you're dealing with disability and workers comp. So some of the dynamic we're talking about in auto claims where we're seeing people not file doesn't really play any IQ. We continue to be really happy with the performance. We talked about at the time of the deal that the NDR for that business was over 150. We're talking about disability.
Speaker Change: We saw that metric continuing Q1, it was over 150 so the business continues to perform and we're really happy about the integration and we're excited about as it moves into casualty.
Speaker Change: Yeah, thanks. That's great, Tyler. And then you guys brought up MetHub so many people to follow up on Met. Can you remind us maybe what's the pricing model for MetHub? Is this something that's going to be monetized or is it intended more to drive adoption of the broader casualty suite? And then I know it's not fully launched yet, but I don't know if you started adding some early conversations with customers, maybe how those conversations been going. Thank you.
Speaker Change: I'll take the second part of your question first. We have had conversations with customers, both with in disability workers comp and CCC score customer base across the board, this tremendous excitement because
Speaker Change: The EIQ team has really, really built a lot of depth and a lot of capability.
So we're seeing that.
We are targeting typically a 5-to-1 ROY. We are targeting a 5-to-1 ROY.
and there's tremendous excitement around it.
but in terms of actually pricing and the revenue models [inaudible]
Speaker Change: We have not fully locked down on that, and it won't really have much of an impact this year, Brian , you want to pick? Yeah, I mean, Jeremy, to your point, we will be charging for Madhub. As Githesh said, it's an ROI based, like we do with our other solutions, it will be subscription based. We will be doing this in the future.
Speaker Change: of Revenue. We're really excited about the interest in the momentum around engagement. It won't have a material impact in this year.
Speaker Change: But we think, as we exit the year, that it will be more meaningful, as we get into next year, on revenue being generated off Madhub, indoor casualy clients.
Great, thanks guys for taking my questions. Yep, thank you.
Speaker Change: Thank you. As a reminder to ask a question you will need to press star 11 on your telephone and wait for your name to be announced.
Speaker Change: Our next question comes from Matt Bullock from Bank of America. Your line is now open.
Speaker Change: Great, thanks. I'm on for Mike Funk. Appreciate the question. So, good to see the progress.
Speaker Change: of emerging solutions despite some of the macro pressure. You help us think about how the uncertainty has been and could impact implementation cycles and adoption momentum of those emerging solutions. If you view any of those, be more or less macro sensitive.
Thanks
Yeah, we don't really see...
Speaker Change: As we've said, the demand continues to be very strong across all of our emerging solutions.
Right? Whether it is Estimate FTP, which is now...
You know, increased in volume, 40 plus customers, as diagnostics, parts...
Speaker Change: We're seeing and the demand continues to be very strong and we don't think it really affects implementation cycles even the OEM customer that I mentioned. It was a pretty fast implementation.
Brian Herb: We signed the contract at the end of March, they rolled out literally in April , so it was a pretty fast, so we don't think it affects it. What Brian and I are saying is that
Brian Herb: Out of the abundance of caution given the broader macro environment, it behooves us to be somewhat prudent in how we forecast.
Brian Herb: Revenue and the like. And to be very clear, we're not seeing the impact, we just want to make sure we're cautious in terms of...
Brian Herb: how this may or may not affect things, you know, further down the road.
Got it, thank you very much [inaudible]
Thank you.
Thank you.
Speaker Change: Our next question comes from Chris Moore from CJS Securities. Your line is now open.
Speaker Change: Hi, this is William for Chris. A CCC payments is an important long-term opportunity. Could you talk a bit more about the progress made over the past year so as well as the critical milestones that we should be thinking about in 2025? Bye.
Sure, you know, we have...
Speaker Change: and different workflows and payments. And so we're quite excited that it went live. It's not a material impact in terms of revenue this year, but in exercising the various payment flows it's been good and we feel good about the momentum. Thank you.
Speaker Change: Thank you and it's been four years since CCC won public. What is the biggest change from that market perspective and how would you prepare your competitive positioning now versus then? [inaudible]
I would say...
Speaker Change: Our competitive positioning continues to get better. And I would say there are really three underlying fundamental reasons for that. One,
Speaker Change: The innovation that we have invested in so heavily, you know, for the last four years is really giving us a technological advantage that our customers are seeing.
Speaker Change: Second, the network itself that we have built across OEMs and parts providers and insurers and the like.
That network continues to be very, very strong.
Speaker Change: and the sentiment of our customers in terms of our, you know, with that continuing to win new logos with the 99% GDR, the customer retention has been pretty solid.
Speaker Change: and I would say the most important thing we're seeing is the ROI.
Speaker Change: That our solutions are emerging solutions on top of our core solutions. That ROI is being very well received and is a very important strategic component for our customers.
Speaker Change: So those are the factors that we see from our vantage point. [inaudible]
Thank you.
Thank you.
Speaker Change: I'm showing no further questions at this time. I would now like to turn it back to Githesh Ramamurthy for closing remarks.
Githesh Ramamurthy: Well, I want to take this opportunity on behalf of all of us at CCC for joining us today.
Speaker Change: And most important, I'd like to thank our customers, CCC team members,
and Shareholders. [inaudible]
for a strong start to 2025. 5.
Speaker Change: We are excited about helping our customers with the digital transformation journeys they're on and remain confident in our ability to deliver on our long-term strategic and financial objectives.
Speaker Change: Thank you so much for your continued interest and trust in CCC, and we look forward to updating you on our next call.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.