Earnings call transcript: CCC Intelligent Solutions Q4 2024 sees stock surge post-earnings

CCC (WA:CCCP) Intelligent Solutions Holdings Inc. (CCCS) reported its fourth-quarter 2024 earnings, matching analyst expectations with an earnings per share (EPS) of $0.10 and slightly surpassing revenue forecasts at $246.5 million. The company’s stock experienced a notable rise of 6.8% in aftermarket trading, reflecting positive investor sentiment following the earnings announcement. According to InvestingPro data, CCCS maintains impressive gross profit margins of 77.31% and has received a "GOOD" overall financial health rating, suggesting solid operational efficiency.

Key Takeaways

• CCC Intelligent Solutions reported a revenue increase of 8% year-over-year for Q4 2024.
• The company’s stock rose 6.8% in aftermarket trading following the earnings release.
• CCCS launched new AI-driven products and acquired Evolution IQ to expand its market reach.

Company Performance

CCC Intelligent Solutions demonstrated solid performance in Q4 2024, with revenue reaching $246.5 million, marking an 8% increase compared to the same quarter last year. The company’s efforts to enhance its product offerings and expand through strategic acquisitions, such as Evolution IQ, have contributed to its growth. The broader insurance and automotive repair sectors are still in the early stages of digital transformation, which CCCS is capitalizing on through its AI-driven solutions.

Financial Highlights

• Revenue: $246.5 million, up 8% year-over-year
• Full year 2024 revenue: $944.8 million, up 9% year-over-year
• Q4 Adjusted EBITDA: $106 million (43% margin)
• Free cash flow: $106 million, up from $75 million in the previous year

Earnings vs. Forecast

CCC Intelligent Solutions met analyst expectations with an EPS of $0.10, while revenue slightly exceeded forecasts of $245.35 million. This alignment with forecasts suggests stable performance and effective management of market expectations.

Market Reaction

Following the earnings announcement, CCCS’s stock rose by 6.8% in aftermarket trading, reaching $11. This surge reflects investor confidence in the company’s growth trajectory and strategic initiatives, such as the acquisition of Evolution IQ and the launch of new AI-driven products. The stock’s movement is significant, considering its position within the 52-week range of $9.79 to $12.88. Analyst targets range from $12.01 to $15.00, suggesting potential upside, while the stock maintains relatively low price volatility with a beta of 0.71.

Outlook & Guidance

For 2025, CCCS projects revenue between $1.055 billion and $1.065 billion, representing a 12% growth. The acquisition of Evolution IQ is expected to contribute $45-$50 million to this growth. The company anticipates an adjusted EBITDA of $417 million to $427 million and expects organic growth at the lower end of the 7-10% range.

Executive Commentary

CEO Gitesh Ramamurthy emphasized the importance of digital transformation in the insurance economy, stating, "We believe the multi-trillion dollar insurance economy is in the early innings of digital transformation." He also highlighted the potential of intelligent experiences, saying, "Intelligent experiences are the next phase in tech-enabled business transformation."

Risks and Challenges

• Potential slowdown in claims volume, which decreased by 5% in 2024.
• Increasing complexity in repair processes, with 13.5 parts per estimate.
• Market saturation and competition in the AI-driven insurance solutions sector.

Q&A

During the earnings call, analysts inquired about the moderation in claims volume and the company’s strategy for bundling solutions to enhance adoption. Executives detailed the integration plans for Evolution IQ and discussed the company’s AI strategy, emphasizing customer sentiment and long-term growth potential. For a comprehensive analysis of CCCS’s valuation and growth prospects, access the detailed Pro Research Report available exclusively on InvestingPro, covering over 1,400 US stocks with expert insights and actionable intelligence.

Full transcript - Dragoneer Growth Opportunities Corp (CCCS) Q4 2024:

Conference Operator: Good day and thank you for standing by. Welcome to the CCC IntellectionX Solutions Fourth Quarter Fiscal twenty twenty four Earnings Conference Call.

At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Warmington, Vice President of Investor Relations. Please go ahead.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions: Thank you, operator. Good afternoon and thank you all for joining us today to review CCC’s fourth quarter and full year twenty twenty four financial results, which we announced in the press release issued following the close of the market today. Joining me on the call are Gitesh Ramamurthy, CCC’s Chairman and CEO and Brian Herb, CCC’s CFO. The forward looking statements we make today about the company’s results and plans are subject to risks and uncertainties that may cause the actual results and the implementation of the company’s plans to vary materially. These risks are discussed in the earnings releases available on our Investor Relations website and under the heading Risk Factors in our 2024 Annual Report on Form 10 K filed with the SEC later today.

Further, these comments and the Q and A that follows are copyrighted today by CCC Intelligent 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 in a violation of United States copyright and other laws. Additionally, while we will provide a transcript of portions of this call and we’ve approved the publishing of the transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in the transcripts. Please note that the discussion 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 on our earnings release that is available on our Investor Relations website. Thank you. And now I’ll turn the call over to Gitesh.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Thank you, Bill, and thanks to all of you for joining us today. I’m pleased to report that CCC delivered another quarter of strong top and bottom line performance to complete another record year in 2024. For the fourth quarter of twenty twenty four, CCC’s total revenue was $246,000,000 up 8% year over year and at the high end of our guidance range. Adjusted EBITDA for the fourth quarter was $106,000,000 ahead of our guidance range and adjusted EBITDA margin was 43%. Looking at the full year 2024, revenue was $945,000,000 up 9% year over year.

Adjusted EBITDA was $397,000,000 up 12% year over year with an adjusted EBITDA margin of 42% up about 130 basis points year over year. This solid financial performance reflects our durable business model and the ability to balance margin expansion with investments in innovation that help position CCC for our next phases of growth. In 2024, we also made significant progress in strengthening and expanding the scope of the CCC network with several key renewals and new customer additions, including the onboarding of over 1,000 new collision repair facilities to our platform. We also continue to grow our industry leading partner ecosystem and now have over 200 active technology and service providers in our network. Our leadership in product innovation and AI also continued to advance in 2024 with the launch of several new solutions as well as our IX Cloud event based architecture and with our AI now in production at over 100 insurers and over 10,000 collision repairers.

We took that a step further through our acquisition of Evolution IQ, a fantastic business, which expanded our addressable markets into disability and workers’ compensation, while also deepening and strengthening our AI and casualty capabilities. As we look to 2025 and beyond, we continue to be incredibly excited about the numerous growth opportunities ahead of us, which I will now cover in three topics. The first is our conviction in the digitization of the insurance economy and the transformational impact we believe it will have on the industry. The second is the real world results customers are seeing from our most recent innovations and third is the actions we’re taking to accelerate our customers’ journey along this transformation, which we believe will also accelerate CCC’s growth. Now let me start with my first topic.

We believe the multi trillion dollar insurance economy is in the early innings of digital transformation and CCC is well positioned to be our customers’ partner of choice for the transformation. Our clients continue to face significant operational challenges as the many forms of complexity they deal with continue their persistent rise. Vehicle technology, labor shortages and scale gaps, medical treatments, natural disasters, data proliferation, changing regulations and much more. These inflationary pressures have driven record premium increases in recent years and are also extending claims and repair cycle times. In my conversations with customers, whether with management teams or Boards of Directors, they are increasingly describing these trends as unsustainable within their current operations and as a result are increasingly determined to deploy AI driven transformation across their businesses.

We believe the fusion of our industry leading AI, deep multi sided network and our scalable multi tenant platform positions us as the partner of choice for this digital transformation and for more and more of a claim and repairs lifecycle to be processed using CCC solutions over time. And with the depth and breadth of the investments we have already made across our product portfolio, we are ready to help our customers achieve this level of end to end transformation. For auto insurers, that means helping them all the way upfront at first notice of loss as they work to accurately and efficiently triage a claim and then helping them navigate the many downstream steps from vehicle appraisal to injury resolution and even subrogation. For collision repairs, it means first helping them to drive business by optimizing their web presence or by collaborating with insurers and then supporting them through the entire repair process, including accessing repair procedures, scheduling technicians, ordering parts, and we can even support the business office in processing payroll and other tasks through integrations into our partner ecosystem. Fully unlocking the value of these capabilities requires a holistic approach to transformation, which we are seeing customers increasingly embrace, so they can build and deploy the intelligent experiences that matter most to them.

Intelligent experiences are to us the next phase in tech enabled business transformation. It means using rich data and state of the art AI to identify the best outcome for a given claim or repair based on customer specific configurations and then making that happen by connecting the many different participants across the ecosystem who are involved in resolving that event. With industry professionals facing ever higher demands with an all around increase in complexity, helping them identify and implement the next best action for their work and doing that at scale is going to become a defining feature of AI enabled vertical software. Evolution IQ pioneered the use of AI enabled claims guidance in disability and workers’ comp and by delivering proven results has been growing rapidly with multimillion dollar annual contracts from many of the largest insurers in The United States. By helping claims professionals identify the highest value tasks to do next from among hundreds of possible tasks, they are bringing the future of AI guided next best actions to life.

The nature of this transformational impact is very clear from my meetings with the leadership of Evolution IQ customers. The addition of Evolution IQ to our portfolio continues CCC’s track record of delivering tangible real world impact from AI through an attractive and highly scalable economic model. We believe the digitization of the insurance economy through intelligent experiences is inevitable. And while the exact progression is hard to predict, we expect it to provide CCC with many years of growth. This brings me to my second topic, which is a real world ROI clients are realizing from our newer solutions as they make this transition.

Throughout our history, success has always been driven by reference level products that deliver a high and demonstrable ROI with results from early launch customers setting the path for wider adoption across our customer base. And we are now consistently seeing this ROI play out in our priority areas of growth. Within our Insurance Auto Physical Damage or APD business, customers are realizing tremendous benefits from the capabilities in our intelligent APD suite, a set of AI enabled solutions that dramatically improves effectiveness and efficiency in APD claims handling and resolution. Many of these solutions leverage proven computer vision AI to extract insight from photos and then deploy those insights across customer and partner workflows. This includes helping insurance appraisers prepare a vehicle damage estimate that is on average 30% less time than before to more rapidly identify a potential total loss regardless of where that vehicle is located.

Making that total loss determination as early as possible can eliminate hundreds of dollars in avoidable rental, storage and other charges, while also greatly improving a carrier’s customer and employee experience. Today, it takes an insurer about thirteen days on average to make that total loss determination. By using the capabilities in our intelligent APD suite, One National insurer has seen a 30% lift in early total loss identifications with an average reduction of three to seven days in cycle time for vehicles located within their direct repair program. Our casualty and subrogation solutions are also driving significant real world ROI for our clients. In Casualty, innovations in our third party bill review solutions delivered an almost 40% increase in identified improvements for our top 10 insurer last year.

And in subrogation, our AI enabled inbound solution has enabled some carriers to settle more than 40% of demands the same day they receive them versus days or weeks traditionally. We now have over 20 insurers using one of our subrogation solutions, including multiple in the top 20. Priority growth areas in our automotive business are also delivering substantial benefits to repair facilities along with the broader ecosystem of auto manufacturers, dealers, parts suppliers and other partners they do business with. Several of our newer repair facility solutions improve shop productivity by standardizing operating procedures and streamlining manual tasks. For example, our recent introduction of bill sheets leverages as manufactured vehicle data to quickly identify the exact part that should be used in a repair.

With so many vehicle trims and options to choose from, this data can filter the choices for say a headlamp from dozens down to one. In addition to saving time during the estimating process, real world results show another benefit, reduced parts returns from ordering the wrong parts. Parts returns for customers using the solutions are 25% lower by quantity and more than 50% lower by dollar value. Customers of the solution are also seeing higher customer satisfaction scores as improved accuracy in part selection upfront improves cycle time along with other aspects of the customer experience. A clear and demonstrable value of this solution has led to rapid adoption with thousands of repair facilities now using it despite being in the market for less than a year.

We are also delivering real world ROI impact to companies in the broader automotive ecosystem that do business with our repair facility customers. For example, parts suppliers continue to see strong results from their integration into CCC1 because it allows repair facilities to electronically order parts in the operating system they use every day. In fact, the efficiencies are so significant that one major OEM recently decided to use our part solution as their exclusive platform for managing promotional part sales to collision repair facilities. They are the second OEM to do so. We also continue to integrate new diagnostics providers into CCC1, reducing the administrative burden on shops in managing and performing diagnostics related tasks.

This benefits the repair facility, diagnostics provider, and in many cases also the insurer and OEM. And we now have about 20 of repair facility customers taking advantage of this functionality. As I said earlier, EvolutionIQ is also delivering substantial, in some cases, multi point combined ratio impact to its clients. And because of those results, clients are excited to do more. Since announcing the acquisition two months ago, I’ve seen from my own personal meetings with both Evolution IQ and CCC clients that their reaction has been overwhelmingly positive, a sentiment that has also been reinforced in day to day customer interactions with our account teams.

We see tremendous opportunity in Evolution IQ’s core disability and workers’ comp markets and Evolution IQ’s capabilities, including medical document summarization, are also highly complementary to our existing casualty business, which is one of our largest growth opportunities and also one of our fastest growing product lines overall. Across our portfolio, the ROI from our newer solutions is generating strong demand and a robust customer pipeline with emerging products collectively representing the fastest growing part of our portfolio. This gives us confidence in the market opportunity for these solutions and as a result focusing more on accelerating their revenue velocity in 2025 and beyond. This brings me to my third topic, which is a set of actions we have taken to help our customers more rapidly adopt our new solutions and accelerate their transformation journeys as we head into 2025. I will start with technology and last year’s introduction of the CCC Intelligent Experience Cloud.

As you heard me describe before, IX Cloud is an overlay that sits on top of CCC’s existing cloud applications, customer workflows and customer and partner systems. It is essentially a distribution system that is able to handle our AI enabled workflows and massive amounts of data from multiple sources in real time. IX Cloud employs an event driven architecture, which means it uses a managed, published and subscribed model that enables companies to set up notifications for relevant business events and configure actions based on those events using AI. This architecture is designed to make it faster and easier for customers to deploy new CCC solutions and it also increases the number of ways customers can use multiple CCC solutions together. There is minimal effort to leverage the new architecture and there is no additional cost to the client.

We are already seeing benefits from this approach with customers and we anticipate it becoming an even more important catalyst moving forward. We have also taken several steps to streamline and upgrade our go to market activities and customer support. The first of these initiatives has been the rollout of new insurance packages that better align existing and new solutions within and across our solution sets. For example, we have found that many customers prefer to buy a complete intelligent APD solution suite to maximize cross product synergies and also streamline their internal rollouts. In many cases, these new packages are also improving adoption of our existing solutions, as is the case of a recent top 20 insurer who not only contracted for new solutions as part of their multi year renewal, but also added several established solutions as part of migrating to a more holistic package based offering.

We are employing this approach for all new and renewal insurance contracts in 2025. I’ve also spoken in recent quarters about the impact of change management on the adoption and ramp up of our newer solutions. And we are making changes to improve our support for customers in this area as well. CCC has always been a deeply trusted partner to our customers and a key part of this has been our support for implementation and change management at a very granular level. But we have found that change management support needed for our newer solutions can sometimes be different in important ways.

First, the productivity impact of our newer solutions often does not just warrant a customer streamlining their operations, but instead transforming them altogether. For example, our AI enabled subrogation solution has led some insurers to consider realigning their entire subrogation operation, which demonstrates the value of the solution, but also requires a different duration and form of support than if we were helping an insurer migrate an existing process. Second, we’ve also seen variations in how quickly customers will scale a new solution across their operations. For example, while paid volume on estimate STP, a component of our intelligent estimating solution, is still just 4% of our annual claims overall, we announced in 2024 that a top 10 insurer was on track to process 20% of their repairable claims on a run rate basis using this product. By replicating the learnings from that initiative, we are helping other carriers set similar goals.

And that first insurer that was on track to process 20%, they feel very good about their results. As a hyper growth AI startup, EvolutionIQ has been particularly effective at providing AI specific change management support to its customers. During my visits with Evolution IQ’s clients, they told me directly how important these change management capabilities have been for them to get results and we are already starting to incorporate these approaches more broadly across CCC. Lastly, we have taken steps to realign our customer facing functions, so we can be better partners in accelerating our customers’ transformation journeys overall. Starting next month, all of CCC’s market facing and service functions will operate under Tim Welsh, who will be joining as President.

Tim brings a wealth of experience to CCC, including twenty five plus years of P and C and life insurance leadership at McKinsey where he served as a senior partner and member of McKinsey’s Board of Directors. Tim has worked with many of the top insurers in the world and most recently Tim spent seven years as Vice Chairman of Consumer and Business Banking at U. S. Bank. Tim has a deep understanding of the broader insurance economy as well as transformation, including a recent digital transformation of U.

S. Bank’s twenty thousand plus employee retail banking system. I know Tim has followed CCC for a long time and is excited about the growth opportunities in front of us. We look forward to Tim helping our teams advise our customers on their own transformations and advancing the digitization of the entire insurance economy. Welcome, Tim.

As we look ahead to 2025, we remain confident that the global insurance economy is still in the early stages of a generational digital upgrade cycle and that CCC is well positioned to help our customers navigate this transition. We are excited about the long term growth potential this opportunity represents and look forward to supporting our customers and partners on this journey in the months and years ahead. I will now turn the call over to Brian, who will walk you through our results in more detail. Thanks, Gitesh.

Brian Herb, CFO, CCC Intelligent Solutions: Twenty twenty four was a year of solid revenue growth, margin expansion and free cash flow generation that reflects our ability to effectively balance between investments in our growth initiatives and ongoing margin discipline. It also highlights the strength of our durable business model. Now as we turn to the numbers, I’d like to review our fourth quarter and fiscal year twenty twenty four results and provide guidance for the first quarter and full year 2025. Total (EPA:TTEF) revenue for the fourth quarter was $246,500,000 which is up 8% from the prior year period. Total revenue for the fiscal year twenty twenty four was $944,800,000 which was up 9% over 2023.

In the fourth quarter of twenty twenty four, approximately five percentage points of our growth was driven by cross sell, up sell and adoption of our solutions across our client base, including repair shop upgrades, the continued adoption of our emerging solutions and the ongoing strength in casualty and other ecosystem customers. Approximately three points of growth came from new logos, mostly from our repair facilities and parts suppliers. About one point of growth in Q4 came from our emerging solutions, mainly diagnostics, build sheets and estimate STP. Run rate from emerging solution overall was about 3% of our total revenue in Q4 twenty twenty four and these solutions continue to be our fastest growing portion of the portfolio. Now turning to our key metrics.

Software (ETR:SOWGn) gross dollar retention or GDR captures the amount of revenue retained from our client base compared to the prior year period. In Q4 twenty twenty four, our GDR was 99%, which is in line with the last four quarters. Note that since the first quarter of twenty twenty, our GDR has been between 9899% and is either rounded up or down, primarily driven by repair shop industry churn. We believe that the 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 tenant of our predictable and resilient revenue model.

Software net dollar retention or NDR captures the amount of cross sell and upsell from our existing customers compared to the prior year period as well as volume movements in our auto physical damage client base. In Q4 twenty twenty four, our NDR was 105, down modestly from 106 in Q3 twenty twenty four. Now I’d like to turn to 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 $188,000,000 Adjusted gross profit margin was 76%, which was down from 79% in Q4 twenty twenty three. The lower adjusted gross profit margin primarily reflects two factors. The first is an increase in depreciation expense from capitalized projects recently put into service. The second is driven by mix as we’ve seen faster growth from certain casualty solutions that carry a lower margin profile. Overall, we feel good about the operating leverage and the scalability of the business model and our ability to deliver against our long term adjusted gross profit margin of 80%.

In terms of expenses, adjusted operating expense in Q4 twenty twenty four was $95,000,000 which is up 4% year over year. Most of the $4,000,000 year over year expense growth was the result of lapping a one time $3,000,000 insurance claim reimbursement in Q4 of twenty twenty three, which we highlighted last year. Adjusted EBITDA for the quarter was $106,000,000 which is up 6% year over year with an adjusted EBITDA margin of 43%. Now turning to the balance sheet and cash flow. We ended the quarter with $399,000,000 in cash and cash equivalents and $776,000,000 of debt.

At the end of the quarter, our net leverage was 0.9 times adjusted EBITDA. After the close of the acquisition of Evolution IQ in January 6, total debt outstanding was $1,000,000,000 and net leverage approximately two times adjusted EBITDA. Free cash flow in Q4 was $106,000,000 compared to $75,000,000 in the prior year period. Free cash flow on a trailing twelve month basis was $231,000,000 dollars which is 18% up year over year. On a trailing twelve month free cash flow margin as of Q4 twenty twenty four was 24%, up from 23% in Q4 twenty twenty three.

While our free cash flow levels will vary quarter to quarter, we do expect it to trend up over time. Before we turn the page on 2024, I want to say that it was a year of solid financial performance across multiple metrics. Revenue grew 9% organically, adjusted EBITDA margin expanded 130 basis points. Free cash flow margin increased almost 200 basis points. And also on the capital markets front, our stock liquidity improved significantly as private equity ownership decreased from about 70% to just over 20%.

Now looking at 2025, I’ll discuss guidance beginning in Q1 twenty twenty five. We expect revenue of $249,000,000 to $250,500,000 which represents 10% growth year over year at the midpoint. We expect adjusted EBITDA of $92,500,000 to $94,000,000 a 37% adjusted EBITDA margin at the midpoint. For the full year 2025, we expect total revenue of $1,055,000,000 to $1,065,000,000 which is a 12% year over year growth at the midpoint. We expect Evolution IQ to contribute $45,000,000 to $50,000,000 in 2025 as we discussed back in December when we announced the deal.

For adjusted EBITDA, we expect $417,000,000 to $427,000,000 a 40% adjusted EBITDA margin at the midpoint, which includes absorbing a moderate EBITDA loss from EvolutionIQ. So three points to keep in mind as you think about the Q1 and full year guide for 2025. The first point, as Gitesh mentioned, is that the actions we are taking give us confidence in our ability to help our customers advance more rapidly on their digital transformations. As we experienced in 2024 and not unique to launching new solutions, timing of adoption can be hard to predict as new solutions take time to roll out, gain adoptions and scale. For that reason, we are assuming growth excluding Evolution IQ in 2025 remains towards the lower end of our seven to ten long term range and then emerging solutions continue to contribute about one point of growth.

The second point is that Evolution IQ is a high growth business. So we are expecting that revenue contribution from Evolution IQ to increase as 2025 progresses and the business continues to scale. We also expect that Evolution IQ’s EBITDA loss will moderate as we go through the year based on the front loading of integration efforts and the scaling of revenue. The third point is that the adjusted EBITDA margin should be up about 75 basis points year over year to about 43% excluding Evolution IQ. On a reported basis, which includes the dilution from Evolution IQ, full year 2025 adjusted EBITDA margins will be down about 200 basis points at the midpoint to roughly 40%.

We do expect margins to improve from the initial Q1 guide throughout the year and continued expansion on a full year basis in 2026 and beyond. One additional comment. Before the acquisition of Evolution IQ, we are on track to reduce stock based compensation as a percent of revenue from 18% in Q4 twenty twenty four to roughly 12% in 2025. As I mentioned on the Evolution IQ call in December, we will be absorbing about three points of stock based compensation for a total of about 15% of revenue in Evolution IQ were important for alignment and retention of our new team members. We expect share based comp as a percent of revenue to decline from that 15% level beginning in 2026.

So as we wrap up, I’d like to reiterate our confidence in our ability to deliver against our long term revenue growth and adjusted EBITDA margin targets. We believe that our durable business, multi sided network and the growing portfolio of AI enabled solutions will enable us to continue to execute on our strategic priorities and generate significant value for both our customers and our shareholders. With that, operator, we’re now ready to take questions. Thank you.

Conference Operator: Thank Our first question comes from the line of Alexei Gagolev with JPMorgan. Your line is open. Please go ahead.

Alexei Gagolev, Analyst, JPMorgan: Good evening, everyone. Brian, I had a follow-up question about the organic revenue growth. It seems like based on the midpoint of the EvolutionIQ contribution, you’re suggesting that the organic growth in Q1 may be roughly sort of 5%, six % and then accelerating to about 7% for the year. Can you explain what is driving this deceleration versus the organic growth you reported in 2024?

Brian Herb, CFO, CCC Intelligent Solutions: Yes. Hey, Alexei, it’s Brian. So the way to think about Evolution IQ is it’s going to scale as we go through the year. So you can’t look at the five points in each quarter. So we get to five points of contribution from Evolution IQ at the full year.

We are guiding towards the lower end of the long term range in each quarter. So that if you remember the long term range is 7% to 10%. We are in Q1 ’7 percent to 10%. So Evolution IQ is the balance to get to the 10% total.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Does that make sense?

Alexei Gagolev, Analyst, JPMorgan: And can you explain why that is? Is there some sort of seasonality in Evolution IQ revenues?

Brian Herb, CFO, CCC Intelligent Solutions: No, it’s just it’s a hyper growth business and we’re expecting it to continue to scale as we go through the year. So we’ll start at a smaller base and then build as we go sequentially through the year.

Alexei Gagolev, Analyst, JPMorgan: And how much did it generate in 2024?

Brian Herb, CFO, CCC Intelligent Solutions: Yes, we didn’t give that number specifically. We did highlight an NDR number of $150,000,000 when we announced the deal. We talked about the contributions this year for about $45,000,000 to $50,000,000 So those give you the data points to kind of understand the contribution from Evolution IQ.

Alexei Gagolev, Analyst, JPMorgan: Okay. Thank you, Brian. And then with regards to your comment about the contribution of merging solutions, I think you’ve highlighted again that they will contribute about one percentage points to total revenue. When do you expect that contribution to expand? And what is the process of adoption right now among our solutions?

Brian Herb, CFO, CCC Intelligent Solutions: Yes. I’ll talk about the numbers then. I’ll let Gitesh add some color on what we’re seeing on emerging. So just as a reminder, emerging is about 3% of total revenue at this stage for the company. It’s contributing about one point of growth for the company.

So think about that as about $10,000,000 So this part of the portfolio is growing 30 plus percent. It’s the fastest growing part outside of Evolution IQ. We have a lot of engagement with our top clients, working through proof of concepts, pilots, tests and signing of contracts. And so we feel like we’re getting close to the inflection point on emerging moving from one point of growth contribution to something more. We’re just not calling it yet.

So as we talked about in the prepared remarks, there’s a lot of activity and actions that we’re driving across the business and we’re feeling really good on the progress we’re making and we’ll keep you updated on emerging solutions as we go through the year. I don’t get to touch if you want to add any color.

Conference Operator: Yes, I

Brian Herb, CFO, CCC Intelligent Solutions: mean, Alexei, the only thing

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: I wanted to add is, as I said in my comments, we are seeing continued adoption and increase in volume pretty much across the board on all our solutions. And as you know, 2024, as we ended the year, it was the largest launch of new products and new solutions across our entire portfolio. And we feel very good, but we are not going to call anything more than what Brian called out until we see the inflection point of all of these solutions starting to ramp towards the latter on.

Alexei Gagolev, Analyst, JPMorgan: Thank you, Gitesh. And one final, if I may squeeze one more. Are you still seeing softness in the claims volume that you talked about in the past?

Brian Herb, CFO, CCC Intelligent Solutions: Yes. On the volume side, Alexia, we had talked last time about 6% year to date when we looked at it last on total claims. It moderated a bit in Q4. Some of what we saw was the declines that we had seen were partially offset by some weather related events and had a partial offset. So in Q4, we saw the moderation to about minus 3% of total claims.

And so we ended the year at 5% down year over year in 2024.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions: Very clear. Thank you very much for your answers.

Brian Herb, CFO, CCC Intelligent Solutions: All right. Thanks, Lachie.

Conference Operator: Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Josh Bair with Morgan Stanley (NYSE:MS). Your line is open. Please go ahead.

Josh Bair, Analyst, Morgan Stanley: Thanks for the question. I was hoping you could revisit pricing and philosophy there on efforts to lean more into pricing, and wondering how much of the growth when thinking about 2025 is coming from taking price?

Brian Herb, CFO, CCC Intelligent Solutions: Yes. Hey, Josh, it’s Brian. So we haven’t called out a specific pricing component or part of the growth that comes from pricing specific. It will be embedded in our NDR number. So it’s a factor there.

Like all SaaS companies, we do look at the pricing and the value that’s created from the software, make sure that we’re balancing the value being generated from our clients and that we’re getting compensated fairly for that. So that pricing review is ongoing and we always evaluate the packaging and solutions. So that’s why how I’d give you kind of the pricing strategy as we think about the ’25 impact.

Josh Bair, Analyst, Morgan Stanley: Okay. Thanks, Brian. And just a follow-up on the claims volume comment. Just wondering like now with January and February mostly done, what you’re seeing there on the claims side? And wondering if like the Q4 moderate improvement was is a trend that we should carry through to 2025 when thinking about the transactional piece of the business or is like a down five, down five, down six the right level do you think Like in your guidance essentially?

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Yes. This is Gitesh. January always has some weather related activity. So we don’t try to extrapolate off of January. We have the January data.

It has it does look a little moderated, but it’s a little too early to call it one way or the other. And as you know, the vast majority of our revenues are not impacted by frequency. Yes, just to follow-up on Josh, we’re not assuming anything really moving on $25,000,000

Brian Herb, CFO, CCC Intelligent Solutions: We’re not assuming that we’re going to get a lift or a drag. We’re kind of baking in the $24,000,000 performance as the baseline and then we’ll adjust from there.

Josh Bair, Analyst, Morgan Stanley: Okay, that’s helpful. Thank

Alexei Gagolev, Analyst, JPMorgan: you. Yes.

Conference Operator: Thank you. Our next question does come from the line of Dylan Becker with William Blair. Your line is open. Please go ahead.

Dylan Becker, Analyst, William Blair: Hey, guys. Maybe to continue on the topic of the claims volume side. Kitesh, for you, do you still feel like I mean, obviously, there’s still directionally a proxy, but it feels like there’s some nuances in particular in 2024 that somewhat muddy that metric. So is that a fair characterization? And then how to kind of reconcile that with the increasing, what seems like perpetual complexity associated with the cost of repair and the process itself that can offset that as well too?

Thanks.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Yes, sure. So what we did see over the last two plus years is the propensity for consumers to self pay. We saw a market increase in that number, right? That is claims that are still being processed by repair facilities and the like. And that went from 10%, twelve %, which used to be consumer self pay about 2.5%, three years ago to where it’s now 22% ish 22%, twenty three % self pay.

And then we’ve now started to see that number start to come down, meaning consumers paying for repairs is still at that elevated level. And part of that has been the reluctance or the fear of increased rates. And we are also hearing that from we’re seeing that from customers and you can see that from some of our public customers as well. And so while that shift has taken place, we are also seeing that as rates insurance the increase in insurance rates starts to moderate, the expectation is that that too shall normalize over time. But the underlying point that you’re making about the increase in complexity, that is absolutely the case, right, with calibrations, diagnostics, more complex parts, 13.5 parts per estimate, dollars 120 a part.

So all of the underlying complexities are continuing to increase and that’s really where customers are saying they need significant help managing that.

Dylan Becker, Analyst, William Blair: Got it. Okay, too. And so probably fair to say then that mix shift should in theory contribute to some level of growth in claims volumes as well too as that normalizes. Okay. Maybe on the comment around the go to market kind of resource allocation as well too.

It feels like that that’s something that’s coming from a position of strength given the interest and value that you’re seeing from a lot of

Shlomo Rosenbaum, Analyst, Stifel: kind of the larger top carriers.

Dylan Becker, Analyst, William Blair: How should we think about effectively the benefits of having kind of more dedicated focus and teams towards some of those customers and maybe learnings from, I think you called out a top 20 that had a significant expansion as well to kind of accelerate their digital transformation change?

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Yes. I mean without question, we now have essentially for almost every new solution, we have customers in pilot or in production in various forms. And what we are seeing is that more dedication in terms of change management, specific tuning to their processes or some instances like the subrogation example I gave, where people are saying, hey, I can get some real benefits very quickly. For example, in SubRo, people see an 80% decrease in cycle time. Those kind of things means I can actually restructure some of my operations to take full advantage of it.

So what we have learned as a result of these new solutions, especially the AI solutions, is that there is more effort and more energy in really working closely with customers and tuning it. So even our oldest solutions, like when you look at estimate STP, I think we’ve announced that we have probably over 40 plus customers now on estimate STP. And volume is steadily increasing and we see some customers at higher levels, but we have learned a lot about the nuances and the specifics of each solution and change management and we’re putting that effort into working closely with our customers.

Alexei Gagolev, Analyst, JPMorgan: Got it. Okay, very helpful. Thank you, Pritesh. Appreciate it.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Welcome.

Conference Operator: Thank you. And one moment as we move on to our next question. Our next question comes from the line of Samad Samana with Jefferies. Your line is open.

Samad Samana, Analyst, Jefferies: Hey, good evening and I appreciate taking my questions. Maybe first just on the rollout of the new packages and pricing, can you maybe help us understand more clearly how you’re thinking about the impact to maybe net revenue retention from the changes in 2025? What have you baked in? How should we think about that inflow into revenue? And have you made any kind of maybe conservative assumptions since there’s an unknown around it or are you very confident in those assumptions?

Brian Herb, CFO, CCC Intelligent Solutions: Yes. On the way to think about pricing, I mean, as I said before, we don’t explicitly break out the pricing point on NDR. We actually don’t guide on NDR as well. I mean, if you look at NDR and how it’s been trending, it’s roughly 60% to 70% of total revenue. So you can look at that as the ratio.

We have had packages or reset the packages in the repair facilities market for a while, and we’ve more recently rolled out solutions in insurance. Pricing is a component. I would say on the insurance side, it’s not overly material as a driver of growth, but we feel good on the solutions set that we’re taking into market and our go to market approach. But I wouldn’t highlight a material part of growth related to insurance pricing. In fact, the vast majority

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: of our growth comes from new solutions and new products and adoption by new customers. That’s how traditionally all our growth is most of our growth has come from.

Samad Samana, Analyst, Jefferies: Great. And then as we think about Tom taking over his new role, how should we think about what changes we may anticipate in that? And again, maybe just trying to understand, have you taken any different type of approach to guidance this year just when considering what you talked about in terms of packaging changes and the impact of like some of the kind of market changes? How should we think about how you’ve got that in the outlook?

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Yes. Look, I think we’ve factored we just completed our plan at the end of last year. We’re six weeks into the plan. We feel very good about the customer pilots, testing, all of the activities that we described in the call in terms of every single new solution. Tim is going to be a fantastic addition and we’re really excited about Tim coming on board for two very fundamental reasons.

Tim has an extraordinarily deep understanding of the broader insurance economy. He understands the overall space very, very well, having served many of the customers for a long period of time. The second thing we’re really excited about is that Tim has done a remarkable job in a digital transformation of a large scale operation and that’s really what our customers are trying to do. And in Tim’s role, Tim’s ability to guide our teams and guide our customers on their own digital transformation, we think will be incredibly valuable. And Tim, I know is excited about it.

And so we’re looking forward to Tim coming on board and helping with all of that.

Samad Samana, Analyst, Jefferies: Great. Also apologies to Tim for getting your name wrong the first time. Sorry about

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: that. No worries.

Conference Operator: One moment as we move on to our next question. Our next question comes from the line of Gabriela Porteous with Goldman Sachs. Your line is open. Please go ahead.

Maura, Analyst, Goldman Sachs: Hi. This is Maura on for Gabriela. Thanks for taking the question. Sticking with the digital transformation and more specifically AI opportunities, as you’re talking to customers, what are you hearing that might be different than this time last year just in terms of how fully baked the AI strategies are and willingness to invest?

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Sure. We are hearing really three things that I would say when we talk to the management teams of our customers or our boards and more recently have gone out with our EIQ team and talked to very senior levels of their customers. So here’s I would say at a macro level three things. First and foremost, at the board level, at the senior management level, all our customers are now saying we have got to be able to use AI to tame and manage complexity. So it has gone from, hey, this could be an interesting concept.

I don’t know if this is going to work. I’m really not interested in writing a poem with chat GPT, but how can I put AI in really production? So that has been first and foremost that mindset shift to lean into those solutions. Second thing we’re seeing is that customers are now a year, two years into using our solutions. We have 300 plus different AI models and the level of trust and the level of usability of these solutions, I think I mentioned in the call over 10,000 repair facilities using it, 100 plus carriers using it.

So the level of confidence and trust over time that has increased in both the solutions we announced earlier as well as the ROI, the specific ROI people are seeing from solutions like First Look or Subrogation or these tools. So that’s kind of the second bucket. The third bucket is when you look at EIQ and what that team has done, you will see that many of their customers are actually public are reporting their results publicly and are even referencing Evolution IQ as having had a significant impact on the bottom line results in the quarter. So people are translating this into actual operating performance and that is actually making its way from a customer to customer and those references, great execution gives us great references, which are incredibly valuable. So those would be the three, Maura.

Maura, Analyst, Goldman Sachs: Great. Thanks for all the detail there. And then on EIQ, you talked about the complementary nature to CCC’s existing products. Just higher level, how are you thinking about the timeline around synergies from faster adoption there?

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: We’ve kind of factored all of that in the guide. So first and foremost, let me start out by saying, everything we thought about the team, we feel very, very good. We’ve spent a lot of time in the integration, so that feels fantastic. The reaction from EvolutionIQ customers as well as the traditional CCC customers has been very, very positive. And what we see is that they have a lot of growth in their core markets in going into 2025.

And in addition to that, the one of the solutions, the ability to do medical summarization through a solution called MedHub, that solution is extraordinarily unique and capable that is very valuable for Evolution IQ customers, but also applies to our casualty business. So it’s really a product synergy and we’ve been world leader we’ve been absolutely fantastic with our photo AI and all of the capabilities there. The Evolution IQ’s ability to understand hundreds and hundreds of pages of medical information and documents and extract very specific actionable information is useful to the CCC casualty business as well.

Brian Herb, CFO, CCC Intelligent Solutions: Yes, maybe it’s Brian just to add a point. So as Gitesh said, there is certainly revenue product synergies. We are excited about the opportunities, specifically the 25 guide. There’s not a meaningful part within the guide regarding the revenue synergies.

Maura, Analyst, Goldman Sachs: Got it. Thank you.

Conference Operator: Thanks, Mark. Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Shlomo Rosenbaum with Stifel. Your line is open.

Please go ahead.

Shlomo Rosenbaum, Analyst, Stifel: Hi, thank you very much. Gitesh, I just want to ask you like holistically, when you look at the growth of the business, we’re not going to have or at least it’s not assumed in your guidance that the volume of claims is going to be impacting the revenue growth. And we’ve seen the revenue growth migrate from the high end of the range to what’s expected to be the low end of the range. What exactly is changing in the market? Is it the fact that there’s so much need from the customers to make changes on their end?

So you’re ending up with bottlenecks or what exactly is changing that’s resulting in the growth migrating from the upper end to the lower end over the course of frankly a year?

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Yes. I would say Shlomo, so first and foremost, having seen or been close to this for a very long period of time, I’ve seen this pattern multiple times over the years, especially as you go from one wave of solution to the next generation of solutions. And as you go as we went to the Internet platform, as we go to mobile capabilities, as you go to now the next generation of AI based solution, there’s always a transition period where the adoption of customers, a lot of work to be done to really put the products in production. It’s also the broadest set of solutions we’ve ever released. So I would say it’s a combination of both of those is a transition to the next wave of growth, as well as the adoption things that I talked about, which is helping with more change management and some of the things that we talked about.

So that’s why we are not calling an inflection point on the new solutions until we actually see it.

Shlomo Rosenbaum, Analyst, Stifel: Okay. And then in terms of the bundling to get more solutions, did that start just in the beginning of the year? And usually when companies do that, especially with products that are proven, it usually is a great way for them to raise the price on existing solutions, you’re adding new bales and whistles. And I’m just wondering where is in the context of your starting the bundling here, are you kind of testing it out first in order to see the adoption? Because I would think that it should drive just better growth just from the opportunity to price things well or to bundle things in a way that can drive additional sales.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Yes, I think so. First and foremost, as Brian described, pricing is not a material part of this. But what it is doing is that when you think of, for example, estimate STP working with First Look, working with intelligent reinspection, they all rely on the same photo AI capabilities. So customers that were either adopting mobile estimate STP, intelligent reinspection and First Look, it is sometimes easier for customers to align three, four, five different solutions together and implement them is the same amount of effort, but the ROI is significantly greater. So that’s really what we’re trying to do is to make it easy for customers to adopt with the ROI.

That’s really the primary purpose here.

Brian Herb, CFO, CCC Intelligent Solutions: Okay, thanks.

Conference Operator: Thank you. And one moment as we move on to our next question. Our next question comes from the line of Chris Moore with CJS Securities. Your line is open. Please go ahead.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions0: Hey, good evening guys. Thanks for taking a couple. Mostly, I think just modeling at this point in time, you probably went through it when during the Evolution IQ, but from an interest expense perspective, is there kind of a reasonable level that we should be thinking about for fiscal twenty twenty five?

Brian Herb, CFO, CCC Intelligent Solutions: Yes. So a couple of modeling points, Chris. So one, just to pick up the new debt level, since we announced the transaction, the debt levels at $1,000,000,000 The interest rate that we have will be consistent with what we’ve been running at. So there isn’t much of a different on the rate, so you can use the rate. We have 4% cap on $600,000,000 of the debt.

So, and then there’s a spread on top of the cap. So think about the spread at like 200 basis points, 2.25% depending on other factors, but that’s how to model out the interest.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions0: Got it. Obviously, EBITDA margin is coming down a bit with Evolution IQ. Gross margins, adjusted gross margins? Yes. Are they going?

Brian Herb, CFO, CCC Intelligent Solutions: No, no, go ahead, Chris. Sorry, go ahead, Fisher.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions0: No, no, yes. Should we expect a little bit of expansion on adjusted gross margins or how should we be looking at that?

Alexei Gagolev, Analyst, JPMorgan: Yes. I mean for the

Brian Herb, CFO, CCC Intelligent Solutions: full year, adjusted gross margin was 78%. We talked about the long term target of 80%. Gross margins will bounce around a bit quarter to quarter depending on product mix and putting out new solutions into the market. As you think about EIQ and their impact, they have a similar gross margin profile to what we have as kind of a software company. So, Evolution IQ won’t have an implication on our gross profit margin.

But as I said, we feel good where we sit today at 78% in the long term guide of moving towards 80% over time.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions0: Very helpful. I will leave it there. Thanks guys.

Brian Herb, CFO, CCC Intelligent Solutions: All right. Thanks Chris. Thanks Chris.

Conference Operator: Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Peter Griffiths with Citi. Your line is open. Please go ahead.

Alexei Gagolev, Analyst, JPMorgan: Yes. This is Peter on the line for Tyler. Thank you for taking the question guys. On EvolutionIQ, I believe at the time of the announcement you talked about CPC have one overlapping customer with Evolution IQ. Just wondering how long it will take for you guys to really get your stride going with cross selling into the customer base?

And is there any additional changes you need to make to your selling motion as well? Thanks.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Hey, thanks for the question, Peter. The net net of it is there’s a lot of growth in Evolution IQ’s customer base in really as you look at disability, workers’ comp and that market. And as we talked about the product synergy, as we bring in the medical summarization capability into casualty, that will be integrated into our casualty solution suite and sold to traditional customers. And one customer where we do have an overlap, we’ve already started having conversations and made introductions and that’s going forward. But for the most part, overlap is a relatively small piece of the overall puzzle.

Alexei Gagolev, Analyst, JPMorgan: Thanks for the question.

Conference Operator: Thank you. And one moment as we move to the next question. Our next question comes from the line of Kurt Materne with Evercore ISI. Your line is open. Please go ahead.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions1: Yes. Thanks very much. Sort of a related question on Evolution IQ. Gitesh, can you just talk about how you’re thinking about can I guess the question is can CCCS salespeople now cross sell the Evolution IQ product? You sort of referred to it, but I’m just kind of trying to get a sense on when can the individual salespeople start bringing other products into those existing customers.

I realize there’s only one overlapping customer right now, but I would imagine you’d want that to change fairly quickly. So I’m just trying to sorry, you answered us a little bit, but I was just trying to wonder if you could give us a little bit more color on that idea.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Sure. So first of all, the EvolutionIQ team has a great model of how they work with customers and we have and as you know, one of the greatest things when it comes to bringing new customers on board is the quality of the references you have from existing customers who’ve already rolled out. So that’s a big piece of it. So Evolution IQ’s team has really great customers. I’ve actually gone out and met with existing customers.

They are really thrilled with what they have. So there is an already existing pipeline. The Evolution IQ team has been working on those. So that will continue as is. At the same time, we are doing product development and R and D as a team working closely together where we bring in some of the core AI summarized medical summarization capability, but that will become part of the CCC Casualty suite.

Casualty, as I mentioned in the prepared remarks, is also one of our fastest growing businesses. And this adds to that Casualty suite. And as soon as that product is available, that will be ready for sale by our the CCC sales team into our customer base.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions1: Okay. That’s helpful. And then Brian, maybe one for you on the OpEx side. Obviously, you guys are adding a lot of AI functionality into your products. I was just kind of curious within CCCS, are you seeing benefits in terms of your own R and D development cycles?

Are you getting any benefits yourself from the usage of AI internally?

Brian Herb, CFO, CCC Intelligent Solutions: Yes. We are to some degree. I would say we’re early stage and early days on it. Most of our AI that we’ve been focused on is really deploying into our solutions for customers and driving revenue. We have started to deploy AI internally and to drive productivity.

I would just say we’re in the early innings of that. And it really hasn’t driven much through the numbers. That said, we are looking always looking at areas of efficiency and opportunity within our cost base. But I’m sure Gitesh has more to add.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Yes. One particular area we’re seeing is in development, where

Josh Bair, Analyst, Morgan Stanley: one

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: of the most challenging parts of any large complex software development process and we do over 1,900 releases a year, is really building out test cases. And where AI is really helping us and our teams is really speed at which we can build test cases and AI is proving to be very effective at that. And so we have started to deploy it in our technology organization as well.

Bill Warmington, Vice President of Investor Relations, CCC Intelligent Solutions1: Thank you.

Conference Operator: Thank you. And one moment as we move on to our next question. Our next question comes from the line of Saket Kalia with Barclays (LON:BARC). Your line is open. Please go ahead.

Hi, this is Elisa Lee

Maura, Analyst, Goldman Sachs: on for Saket. Thank you for the question. I was wondering if you could speak to some of the margin differences between the emerging and established solution and how that might evolve in 2025? Thank you.

Brian Herb, CFO, CCC Intelligent Solutions: Yes. The biggest thing that’s happening in the margin is really the absorbing Evolution IQ. So if you think about the margin profile, we’re the business before the acquisition Evolution IQ, we’re adding about 75 basis points of margin improvement year over year. What then we’ve absorbed the moderate loss, EBITDA loss of Evolution IQ. There’s some integration costs that are upfront.

And when you add that together, it’s taking us to about 200 basis points of margin decline year over year. So what you’re really seeing there is Evolution IQ playing through the margin. As far as emerging and established, emerging has an impact on the gross profit, because it has not scaled yet, but the depreciation is running through gross profit. So that it does have a drag there. Over time, emerging when it gets to scale, we’ll have a similar margin profile as our established solution.

So it’s more of a temporary impact. And when you get merging to scale, it will look similar to our established solutions from a margin profile.

Maura, Analyst, Goldman Sachs: Thank you. That’s very helpful.

Conference Operator: Thank you. And I would like to hand the conference back to Gitesh Ramamurti for closing remarks.

Gitesh Ramamurthy, Chairman and CEO, CCC Intelligent Solutions: Well, thank you all for joining us today. As we said, we are very optimistic about what we have planned for 2025 and we remain confident in our ability to deliver on our strategic and financial objectives. And our customers I know are excited about the digital transformation journeys they’re on and also in working with us and investing in future solutions. I’d like to take this opportunity to thank our customers for the trust and the confidence they placed in CCC and I’d also like to thank our CCC team members and our shareholders for their support. We remain very excited about the opportunities in front of us and look forward to updating you on our next quarterly call.

Thank you so much for your continued interest and trust in CCC.

Conference Operator: This concludes today’s conference call. Thank you for participating and you may now disconnect.

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