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What changed in CCC Intelligent Solutions Holdings Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CCC Intelligent Solutions Holdings Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+425 added−419 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-01)

Top changes in CCC Intelligent Solutions Holdings Inc.'s 2023 10-K

425 paragraphs added · 419 removed · 329 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

85 edited+15 added−18 removed57 unchanged
Biggest changeIn the automotive sector, this is due to several converging factors including, without limitation: • Vehicle parts proliferation : Repairable parts per auto claim have increased 46% since 2011 • Internal technology systems : The average lines of software code per new vehicle doubled from 100 million in 2015 to 200 million in 2020 • Growing connected car capabilities : By 2030, 95% of new vehicles sold globally are expected to be connected • Transportation as a Service (“TaaS”) and other new business models : 10% of Transportation Network Company (TNC) users postpone the purchase of a new car due to availability of TNCs • Advanced Driver Assistance Systems (“ADAS”) and diagnostics systems : The number of vehicles receiving a diagnostic scan as part of a collision repair has increased 1,375% since 2017 • Vehicle Electrification and related infrastructure : Globally, electrification represented more than 65% of overall end-use investment in the transport sector in 2021 and is estimated to have increased to more than 74% in 2022 • Supply chain disruption : More than 80% of Specialty Equipment Market Association (SEMA) members reported supply chain disturbances severely or moderately impacting their business in 2021 We believe the only way to effectively manage increasing complexity is through digitization.
Biggest changeIn the automotive sector, this is due to several converging factors including, without limitation: • Vehicle parts proliferation : Repairable parts per auto claim have increased 60% since 2010 • Internal technology systems : The average lines of software code per new vehicle doubled from 100 million in 2015 to 200 million in 2020 • Growing connected car capabilities : By 2030, 95% of new vehicles sold globally are expected to be connected • Advanced Driver Assistance Systems (“ADAS”) and diagnostics systems : The number of vehicles receiving a diagnostic scan as part of a collision repair has increased 1,000% since 2017 • Vehicle Electrification and related infrastructure : By 2035, 50% of global car sales are expected to be electrified vehicles • Vehicle damage severity from collisions : Since 2017, the cost to repair vehicles damaged in automotive claims has increased 54% We believe the only way to effectively manage increasing complexity is through digitization.
Our repair procedures provide technicians with a single source for data-driven insights to assist them in conducting thorough, consistent repairs, reducing the need for multiple subscriptions and enabling access to current OEM guidelines and processes. Our checklist solutions enable documentation of standard operating procedures and tracking of performance which allows repair facility managers to identify areas for improvement.
Our repair procedures provide technicians with a single source for data-driven insights to assist them in conducting thorough, consistent repairs, reducing the need for multiple 9 subscriptions and enabling access to current OEM guidelines and processes. Our checklist solutions enable documentation of standard operating procedures and tracking of performance which allows repair facility managers to identify areas for improvement.
Every employee is encouraged to work with their manager to create an individual development plan focused on their career aspirations and documenting objectives they will strive to achieve through opportunities such as self-directed e-learning, soft-skill and technical/product training via our Learning Academy, professional certifications, stretch assignments, and our formal mentorship program.
Every employee is encouraged to work with their manager to create an individual development plan focused on their career 12 aspirations and documenting objectives they will strive to achieve through opportunities such as self-directed e-learning, soft-skill and technical/product training via our Learning Academy, professional certifications, stretch assignments, and our formal mentorship program.
As the publisher of Crash Course, a robust industry dataset on Auto Physical Damage and Casualty claims trends, CCC engages clients and prospects with custom 11 content, industry analysis, and unique insights. Monthly reports and trends data underpin our marketing outreach generating awareness in trade journals, industry presentations, and online publications.
As the publisher of Crash Course, a robust industry dataset on Auto Physical Damage and Casualty claims trends, CCC engages clients and prospects with custom content, industry analysis, and unique insights. Monthly reports and trends data underpin our marketing outreach generating awareness in trade journals, industry presentations, and online publications.
Our Estimate – STP solution takes estimate automation to the next level by combining AI, digital workflows, data, and partner connections to automatically initiate and populate detailed estimates within seconds. The outcome is actionable estimates with line-level detail, including parts, labor operations and hours, and taxes.
Our Estimate – STP solution takes estimate automation to the next level by combining AI, digital workflows, data, and partner connections to automatically 8 initiate and populate detailed estimates within seconds. The outcome is actionable estimates with line-level detail, including parts, labor operations and hours, and taxes.
Our leading network was built company by company, and spans the P&C insurance economy, giving us the ability to deploy cross-market solutions and create seamless customer experiences. We believe our data and network assets are highly differentiated and very difficult to replicate.
Our leading network was built company 6 by company, and spans the P&C insurance economy, giving us the ability to deploy cross-market solutions and create seamless customer experiences. We believe our data and network assets are highly differentiated and very difficult to replicate.
For example, our configurable carrier workflow allows insurers to design custom workflows that create differentiated experiences and adjust parameters to deliver targeted results. • Innovation : We invest heavily in R&D and continuously bring new innovative solutions to market.
For example, our configurable carrier workflow allows insurers to design custom workflows that create differentiated experiences and adjust parameters to deliver targeted results. 10 • Innovation : We invest heavily in R&D and continuously bring new innovative solutions to market.
Our sales teams are structured to address the different needs of our markets. For our small business sales efforts, CCC employs a geographically dispersed account team structure to facilitate in-person demos and direct sales, along with an inside sales team.
Our sales teams are structured to address the different needs of our markets. For our small and midsize business sales efforts, CCC employs a geographically dispersed account team structure to facilitate in-person demos and direct sales, along with an inside sales team.
Our casualty solutions automate and expedite casualty claims processing by applying intelligent rules engines based on insurer-specific parameters to process casualty claims data quickly and segment payment-ready bills from those that the insurer wants to review.
Our casualty solutions automate and expedite casualty claims processing by applying intelligent rules based on insurer-specific parameters to process casualty claims data quickly and segment payment-ready bills from those that the insurer wants to review.
We are a trusted partner to our clients, which allows us to collaborate and adapt our business based on customer feedback and changing expectations to stay ahead of our competition. • Network access : CCC’s cloud platform is used by more than 30,000 companies, including insurers, repairers, automotive manufacturers, parts suppliers, financial institutions, and others.
We are a trusted partner to our clients, which allows us to collaborate and adapt our business based on customer feedback and changing expectations to stay ahead of our competition. • Network access : CCC’s cloud platform is used by more than 35,000 companies, including insurers, repairers, automotive manufacturers, parts suppliers, financial institutions, and others.
Our application layer delivers solutions to a base of more than 650,000 registered users. CCC applications power end-to-end customer experiences, digital workflows, AI, network management, and telematics capabilities across the markets we serve. Our AI approach is based on automated deep learning and parallel processing of mathematical models.
Our application layer delivers solutions to a base of more than 648,000 registered users. CCC applications power end-to-end customer experiences, digital workflows, AI, network management, and telematics capabilities across the markets we serve. Our AI approach is based on automated deep learning and parallel processing of mathematical models.
Through our focus on increasing the diversity of our candidate pool, we increased the number of 2022 new hires from under-represented backgrounds as compared to the prior year. We believe a diverse workforce at all levels and an inclusive culture are foundational to our success and will enable us to better serve our customers.
Through our focus on increasing the diversity of our candidate pool, we increased the number of 2023 new hires from under-represented backgrounds as compared to the prior year. We believe a diverse workforce at all levels and an inclusive culture are foundational to our success and will enable us to better serve our customers.
Database solutions and corresponding rules engines can be configured and adjusted in real-time based on business needs and market trends. • Enterprise scale and suppo rt: We process more than $100 billion of transactions annually for our more than 30,000 customers, delivering mission-critical SaaS solutions that our customers can count on.
Database solutions and corresponding rules engines can be configured and adjusted in real-time based on business needs and market trends. • Enterprise scale and suppo rt: We process more than $100 billion of transactions annually for our more than 35,000 customers, delivering mission-critical SaaS solutions that our customers can count on.
Since our inception over forty years ago, we have focused our technology on what we believe to be our customers’ most complex problems. We have digitized total loss valuations, repair 6 estimates, DRP programs, shop management functions, repair workflows, medical claims, parts ordering, subrogation, and much more.
Since our inception over forty years ago, we have focused our technology on what we believe to be our customers’ most complex problems. We have digitized total loss valuations, repair estimates, DRP programs, shop management functions, repair workflows, medical claims, parts ordering, subrogation, payments, and much more.
We also provide tools that allow repair Multi Store Operators (“MSOs”) to manage performance, metrics, and compliance across their repair facility network. • CCC Repair Workflow : Repair workflow is the industry’s leading repair management tool that accelerates productivity and simplifies operations for thousands of repair facilities.
We also provide tools that allow repair Multi Store Operators (“MSOs”) to manage performance, metrics, and compliance across their repair facility network. • CCC Repair Workflow : Repair workflow is the industry’s leading repair management tool that enhances productivity and simplifies operations for thousands of repair facilities.
Our Estimating-IQ upgrade incorporates AI into the repair estimating application to provide repairers with a jump start on estimating by applying machine learning to prepopulate estimates with parts and labor operations based on photos of vehicle damage and individual repair facility configurations.
Our Estimating-IQ enhancement incorporates AI into the repair estimating application to provide repairers with a jump start on estimating by applying machine learning to prepopulate estimates with parts and labor operations based on photos of vehicle damage and individual repair facility configurations.
Today, CCC has developed more than 300 AI models, some of which are in use across more than 100 insurers, including 18 of the top 20 U.S. automotive insurers based on DWP. • Proprietary data assets : CCC’s platform has processed more than $1 trillion of historical data, enabling us to deliver unique analytics and insights for our customers leveraging our deep proprietary data assets.
Today, CCC has developed more than 300 AI models, some of which are in use across more than 100 insurers, including 27 of the top 30 U.S. automotive insurers based on DWP. • Proprietary data assets : CCC’s platform has processed more than $1 trillion of historical data, enabling us to deliver unique analytics and insights for our customers leveraging our deep proprietary data assets.
Our company-wide Net Promoter Score is 82, which underscores the customer-centric focus that defines our organization including our sales, marketing, product, technology, and operations teams.
Our company-wide Net Promoter Score is 83, which underscores the customer-centric focus that defines our organization including our sales, marketing, product, technology, and operations teams.
Repairers can schedule and track vehicle repair status, assign tasks, and manage 9 productivity across their operation. Configurable dashboards provide visibility into performance. Repairers can also streamline repair management leveraging CCC’s real-time parts ordering platform, selecting parts from multiple vendors through a single shopping cart and invoice. CCC repair workflow solutions also integrate customer interactions.
Repairers can schedule and track vehicle repair status, capture diagnostics data, assign tasks, and manage productivity across their operation. Configurable dashboards provide visibility into performance. Repairers can also streamline repair management leveraging CCC’s real-time parts ordering platform, selecting parts from multiple vendors through a single shopping cart and invoice. CCC repair workflow solutions also integrate customer interactions.
CCC’s subrogation solutions automate subrogation opportunity identification for carriers by applying AI and Natural Language Processing to claims data. Our solutions also digitize subrogation workflows including the creation and distribution of demand packages with third-party carriers that include supporting evidence for subrogation claims.
CCC’s outbound subrogation solutions automate subrogation opportunity identification for carriers by applying AI and Natural Language Processing ("NLP") to claims data. Our outbound solutions digitize subrogation workflows including the creation and distribution of demand packages with third-party carriers that include supporting evidence for subrogation claims.
Using this platform, participating customers are able to use our platform to give their parts maximum visibility at the moment when repairers are using CCC software to write their repair estimates.
Using this platform, participating customers are able to give their parts maximum visibility at the moment when repairers are using CCC software to write their repair estimates.
Our platform enables us to innovate in response to new market trends and customer needs and rapidly deploy new solutions to our more than 30,000 customers.
Our platform enables us to innovate in response to new market trends and customer needs and rapidly deploy new solutions to our more than 35,000 customers.
These transactions depend on extensive hyper-local decisions and data, creating a level of complexity that can increase processing costs as well as the potential for fraud and other forms of claims leakage. For automotive claims, the end result is more than one billion days of cumulative claims cycle time (loss date to claim completion date) in the U.S. each year.
These transactions depend on extensive hyper-local decisions and data, creating a level of complexity that can increase processing costs as well as the potential for fraud and other forms of claims leakage. For automotive claims, the end result is approximately two billion days of cumulative claims cycle time (loss date to claim completion date) in the U.S. each year.
We continuously enhance existing solutions and bring new solutions to market, deploying more than 1,600 software releases in 2022. • Deep domain expertise : With decades of experience serving the insurance economy, we have developed a deep understanding of the industries and ecosystem we serve.
We continuously enhance existing solutions and bring new solutions to market, deploying more than 1,400 software releases in 2023. • Deep domain expertise : With decades of experience serving the insurance economy, we have developed a deep understanding of the industries and ecosystem we serve.
Collision repairers use our platform to connect with the industry’s leading network of partners and suppliers across the insurance and repair ecosystem. Our repair solutions represented approximately 43% of our 2022 total revenues, with 99% of that representing software revenue and 1% representing other revenue.
Collision repairers use our platform to connect with the industry’s leading network of partners and suppliers across the insurance and repair ecosystem. Our repair solutions represented approximately 44% of our 2023 total revenues, with 99% of that representing software revenue and 1% representing other revenue.
We have customer agreements with more than 300 insurers (including carriers, self-insurers and other entities processing insurance claims), including 18 of the top 20 automotive insurance carriers in the U.S., based on DWP, and hundreds of regional carriers.
We have customer agreements with more than 300 insurers (including carriers, self-insurers and other entities processing insurance claims), including 27 of the top 30 automotive insurance carriers in the U.S., based on DWP, and hundreds of regional carriers.
Since 2018, CCC system availability has been 99.95% while meeting CCC’s customer service performance and processing commitments. Our technology infrastructure offers proven performance at enterprise scale and is designed to support the future needs of our industry as data continues to proliferate.
Since 2019, CCC system availability has been 99.94%, meeting CCC’s customer service performance and processing commitments. Our technology infrastructure offers proven performance at enterprise scale and is designed to support the future needs of our industry as data continues to proliferate.
We continuously update and enhance our software, deploying more than 1,600 releases in 2022, with a software release quality success rate averaging more than 96% since 2018. • Security and Quality : CCC’s software suite is provided as SaaS hosted in multiple geographically diverse hosting locations with data replication between primary hosting locations and secondary locations in near real-time.
We continuously update and enhance our software, deploying more than 1,400 releases in 2023, with a software release quality success rate averaging more than 96% since 2019. • Security and Quality : CCC’s software suite is provided as SaaS hosted in multiple geographically diverse hosting locations with data replication between primary hosting locations and secondary locations in near real-time.
By combining artificial intelligence, insurer driven rules and a connected ecosystem, Estimate – STP is designed to revolutionize the estimating experience for insurers and policyholders. CCC Estimate – STP has already been deployed in-market with fifteen insurance carriers.
By combining artificial intelligence, insurer driven rules and a connected ecosystem, Estimate – STP is designed to revolutionize the estimating experience for insurers and policyholders. CCC Estimate – STP has already been deployed in-market with more than twenty-five insurance carriers.
In 2022, our R&D spend was 20% of revenue; however, including the impact of capitalized time related to internal use software, our total spend was 24% of revenue on R&D with a primary focus on technology leadership and continuous innovation.
In 2023, our R&D spend was 20% of revenue; however, including the impact of capitalized time related 7 to internal use software, our total spend was 25% of revenue on R&D with a primary focus on technology leadership and continuous innovation.
For our insurance partners, cycle time is costly, which is one reason why, as of 2022, CCC’s platform is relied upon by 18 of the top 20 auto insurers based on DWP in the U.S. to digitize complexity and improve business outcomes.
For our insurance partners, cycle time is costly, which is one reason why, as of 2023, CCC’s platform is relied upon by 27 of the top 30 auto insurers based on DWP in the U.S. to digitize complexity and improve business outcomes.
This comprehensive approach to data science allows us to continuously improve the accuracy of existing models and release new models that automate time consuming workloads. Network integrations across more than 300 insurers, 28,000 repair facilities, and thousands of other ecosystem participants unlock the power of the CCC platform.
This comprehensive approach to data science allows us to continuously improve the accuracy of existing models and release new models that automate time consuming workloads. Network integrations across more than 300 insurers, approximately 29,500 repair facilities, the majority of OEMs and thousands of other ecosystem participants unlock the power of the CCC platform.
We have more than 30,000 total customers, including over 28,000 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), more than 4,500 parts suppliers, 13 of the top 15 automotive manufacturers, based on new vehicle sales, and numerous other companies that participate in the P&C insurance economy.
We have more than 35,000 total customers, including approximately 29,500 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), approximately 5,000 parts suppliers, 13 of the top 15 automotive manufacturers, based on new vehicle sales, and numerous other companies that participate in the P&C insurance economy.
Our current principal competitors include the following: • Internally developed software : Our large customers have sufficient IT resources to maintain and update their own proprietary internal systems and to invest in new technology capabilities.
Our competitors vary in size, breadth, and scope of their solutions. Our current principal competitors include the following: • Internally developed software : Our large customers have sufficient IT resources to maintain and update their own proprietary internal systems and to invest in new technology capabilities.
The key benefits we deliver for our customers include: • Multi-tenant cloud platform enabling flexibility and innovation : CCC’s platform operates in a secure multi-tenant cloud environment, with over 650,000 registered users and 4.9 billion database transactions processed per day.
The key benefits we deliver for our customers include: • Multi-tenant public cloud platform enabling flexibility and innovation : CCC’s platform operates in a secure multi-tenant public cloud environment, with over 648,000 registered users and 5.2 billion database transactions processed per day.
As of year-end 2022, we process more than 176 terabytes of network traffic and execute nearly 4.9 billion database transactions each day. We have invested in hyperscale infrastructure, enabling us to effectively process and store extremely large amounts of information, photos, videos, and driving data. For example, we receive, process, and store nearly 800 million photos each year.
As of year-end 2023, we processed more than 275 terabytes of network traffic and execute nearly 5.2 billion database transactions each day. We have invested in hyperscale infrastructure, enabling us to effectively process and store extremely large amounts of information, photos, videos, and driving data. For example, we receive, process, and store nearly 800 million photos each year.
Intellectual Property We own or have pending patents and patent applications, which generally apply to our software. As of December 31, 2022, we owned 27 issued U.S. patents, which are scheduled to expire between October 2023 and December 2040, and 13 patent applications pending for examination in the U.S.
Intellectual Property We own or have pending patents and patent applications, which generally apply to our software. As of December 31, 2023, we owned 30 issued U.S. patents, which are scheduled to expire between April 2026 and December 2040, and 12 patent applications pending for examination in the U.S.
Our AI solutions increase automation across existing insurance and repair processes including vehicle damage detection, claim triage, repair estimating, and intelligent claims review. We deliver real-world AI with more than 100 U.S. auto insurers actively using AI-powered solutions in production environments.
Our AI solutions increase automation across existing insurance and repair processes including vehicle damage detection, claim triage, claim handling, casualty claim processing, repair estimating, intelligent claim review, and claim subrogation. We deliver real-world AI with more than 100 U.S. auto insurers and more than 1,000 U.S. collision repairers actively using AI-powered solutions in production environments.
P&C insurance industry, processing a single event, such as a claim, can require hundreds of micro-transactions across its supporting economy, involving consumers, lenders, collision repair facilities, automotive manufacturers, dealers, parts suppliers, medical providers, vehicle auctions, and others.
In the automotive insurance sector, which represents nearly half of the U.S. P&C insurance industry, processing a single event, such as a claim, can require hundreds of micro-transactions across its supporting economy, involving consumers, lenders, collision repair facilities, automotive manufacturers, dealers, parts suppliers, medical providers, vehicle auctions, and others.
Complexity in the P&C insurance economy is driven by technological advancements, Internet of Things (“IoT”) data, new business models, supply-chain disruption, and changing consumer expectations. We believe digitization plays a critical role in managing this growing complexity while meeting consumer expectations.
One of the primary obstacles facing the P&C insurance economy is increasing complexity. Complexity in the P&C insurance economy is driven by technological advancements, IoT data, new business models, supply-chain disruption, and changing consumer expectations. We believe digitization plays a critical role in managing this growing complexity while meeting consumer expectations.
To ensure we are advancing our under-represented hiring, we have partnered with several job boards and technical event-based recruiting companies who help to expand our reach to a broader, more diverse set of candidates. We have a formal internship program, targeting leading universities throughout the Midwest and partnering with under-represented university groups.
To ensure we are advancing our under-represented hiring, we have partnered with several job boards and event-based recruiting companies who help to expand our reach to a broader, more diverse set of candidates. We have a formal internship program, targeting leading universities throughout the country and make explicit efforts to partner with diverse universities.
In 2022, we continued our support of Black Girls Code and the Thurgood Marshall College Foundation, as well as the Collision Repair Education Foundation, Collision Industry Foundation, and Women’s Industry Network.
In 2023, we continued our support of Black Girls Code and the Thurgood Marshall College Foundation, as well as the Collision Repair Education Foundation, Collision Industry Foundation, Women’s Industry Network, and the National Society of Black Engineers. 13
Suppliers and clients on the CCC network, including major parts suppliers, diagnostics service providers, and OEM and insurance partners, help to market CCC software. These co-marketing efforts expand our network and reinforce client value.
Suppliers and clients on the CCC network, including major parts suppliers, diagnostics service providers, insurers, repair facilities and OEMs, help to market CCC software. These co-marketing efforts expand our network and reinforce client value.
Our Customers We believe we have strong customer relationships across the more than 30,000 total customers in the end markets we serve, and these relationships are a key component of our success given the long-term nature of our contracts and interconnectedness of our network.
Our Customers We believe we have strong customer relationships across the more than 35,000 total customers in the end markets we serve, and these relationships are a key component of our success given the long-term nature of our contracts and interconnectedness of our network. 11 We have more than 300 total insurance customers in the U.S., comprised of national carriers and regional carriers.
Our automotive telematics solutions can enable new use cases across CCC’s integrated ecosystem, including connected safety and vehicle diagnostics solutions. Our telematics solutions are designed to integrate vehicle telemetry data, such as driving data, accident data, and diagnostics trouble codes, into existing insurance and repair workflows, expediting decisions and reducing cycle time across our ecosystem.
Our telematics solutions are designed to integrate vehicle telemetry data, such as driving data, accident data, and diagnostics trouble codes, into existing insurance and repair workflows, expediting decisions and reducing cycle time across our ecosystem.
Other ecosystem solutions represent approximately 6% of our 2022 total revenue, with 93% of that representing software revenue and 7% representing other revenue.
Other ecosystem solutions represent approximately 6% of our 2023 total revenue, with 92% of that representing software revenue and 8% representing other revenue.
The breadth and depth of our platform creates network effects that accelerate the demand for our software solutions. We intend to extend our network of companies to enhance our value proposition and create new market growth opportunities. • Growing our geographic footprint : We believe there is significant opportunity for our solutions outside of the U.S.
We intend to extend our network of companies, including customers and ecosystem partners, to enhance our value proposition and create new market growth opportunities. • Growing our geographic footprint : We believe there is significant opportunity for our solutions outside of the U.S.
Adjusted EBITDA increased 16.8% year-over-year to $305.4 million. 5 P&C Insurance Economy P&C insurance is one of the largest global industries. The U.S. P&C insurance industry alone serviced approximately $700 billion in DWP in 2021. Insurance is a necessity for the majority of businesses and consumers, and, as a result, the P&C insurance industry has seen steady long-term growth.
P&C Insurance Economy P&C insurance is one of the largest global industries. The U.S. P&C insurance industry alone serviced approximately $775 billion in DWP in 2022. Insurance is a necessity for the majority of businesses and consumers, and, as a result, the P&C insurance industry has seen steady long-term growth.
Auto manufacturers also benefit from CCC Parts and Lender solutions, across their parts and financing businesses, respectively. • CCC Diagnostics Service Provider Solutions : Our repair diagnostics platform allows companies that provide diagnostics, calibration, and programming service solutions to connect to the CCC Diagnostics repair network.
Auto manufacturers also benefit from CCC Parts through analytics and the ability to offer promotional pricing to their shops and dealers. • CCC Diagnostics Service Provider Solutions : Our repair diagnostics platform allows companies that provide diagnostics, calibration, and programming service solutions to connect to the CCC Diagnostics repair network.
CCC Other Ecosystem Solutions CCC’s solutions support other segments of the insurance ecosystem, including parts suppliers, automotive manufacturers, and financial institutions. These solutions extend the CCC network and create value for companies connecting to our platform to improve business outcomes.
CCC Ecosystem and Other Solutions CCC offers enterprise solutions that support multiple customer segments, along with specific solutions tailored to other segments of the insurance ecosystem, including parts suppliers, automotive manufacturers, and diagnostics service providers. These solutions extend the CCC network and create value for companies connecting to our platform to improve business outcomes.
Our SaaS solutions are sold individually, bundled, or in packages, depending on the specific solution and end-market. CCC Insurance Solutions CCC’s solutions help insurers digitize processes, from customer intake to claim resolution, while building smart, dynamic experiences for their customers. Many of our solutions leverage the power of the CCC network by facilitating ecosystem interactions required to complete insurer processes.
CCC Insurance Solutions CCC’s solutions help insurers digitize processes, from customer intake to claim resolution, while building smart, dynamic experiences for their customers. Many of our solutions leverage the power of the CCC network by facilitating ecosystem interactions required to complete insurer processes. All of our insurance solutions are cloud-based SaaS solutions that power critical carrier workflows.
CCC’s innovations are helping to deliver on the industry’s vision of achieving Straight- Through-Processing (STP) – processing claims digitally with limited to no human intervention. CCC's Estimate – STP is the industry’s first estimating experience capable of delivering touchless line level estimate detail in minutes.
CCC’s innovations are helping to deliver intelligent claims automation to the P&C insurance economy. CCC's Estimate – STP ("Straight Through Processing") is the industry’s first estimating experience capable of delivering touchless line level estimate detail in minutes.
Recognizing the importance of work/life balance to mental and physical health, we offer an Employee Assistance Program and paid time off (“PTO”) plan that we encourage employees to use.
Recognizing the importance of work/life balance to mental and physical health, we offer an Employee Assistance Program and paid time off (“PTO”) plan that we encourage employees to use. Ongoing market evaluation help us to identify areas where additional investment may be needed to maintain competitiveness.
CCC repair workflow solutions also enables integrated customer-to-shop payments, automatically storing payment records and simplifying reconciliation. • CCC Repair Quality : We provide advanced solutions to help repairers deliver quality repairs.
CCC Engage integrates into participating insurer workflows for direct appointment scheduling through insurer channels. CCC repair workflow solutions also enable integrated customer-to-shop payments, automatically storing payment records and simplifying reconciliation. • CCC Repair Quality : We provide advanced solutions to help repairers deliver quality repairs.
We have a Diversity Advisory Council (“DAC”) whose mission is to support the development and execution of our I&D strategy. Through the DAC, we organized several unique cultural/heritage events to celebrate and honor the diversity of our team members and support employee-driven employee resource groups (“ERGs”) – the African American Alliance, the Women’s Network, and the Growing Professionals ERG.
Through the DAC, we continued to organize several unique cultural/heritage events in 2023 to celebrate and honor the diversity of our team members and support employee-driven employee resource groups (“ERGs”) – the African American Alliance, the Women’s Network, and the Growing Professionals ERG.
We have more than 300 total insurance customers in the U.S., comprised of national carriers and regional carriers. In 2022, our national carrier customers included 18 of the top 20 automotive insurers based on DWP, with average customer relationships spanning more than 10 years, and numerous exclusive arrangements.
In 2022, our national carrier customers included 27 of the top 30 automotive insurers based on DWP, with average customer relationships spanning more than 10 years, and numerous exclusive arrangements. Our national carrier customers also represent 27 of the top 30 overall P&C insurers in the U.S based on DWP.
We have more than 28,000 automotive collision repair customers, including national MSOs, regional MSOs, independent repair facilities, and automotive dealers that perform collision repair. We partner with all of the national MSOs across the U.S. Our average repair facility contract is approximately 3 years in duration, though MSO customers can have longer contract terms.
We work with hundreds of regional carriers, and across all our insurance customers our average contract is approximately three to five years in duration. We have approximately 29,500 automotive collision repair customers, including national MSOs, regional MSOs, independent repair facilities, and automotive dealers that perform collision repair. We partner with all of the national MSOs across the U.S.
The solution is initially focused on insurer outbound payments, where it enables payments across P&C lines. Recipients of payments only need to enter their payment information once to have it seamlessly deployed across the CCC network, making it easy to activate electronic payments at scale. Our payments platform reduces administrative costs and cycle time while improving customer satisfaction.
Recipients of payments only need to enter their payment information once to have it seamlessly deployed across the CCC network, making it easy to activate electronic payments at scale. Our payments platform reduces administrative costs and cycle time while improving customer satisfaction . CCC International Solutions CCC provides insurance claims software to some of the largest automotive insurers in China.
In 2022, we launched offerings that expanded the breadth and depth of our solutions across a number of areas including OEM-Net, Casualty Mobile Portal, and CCC Diagnostics extensions, among others. • Broadening our network ecosystem : We have a large network of companies on our platform that are dependent on the P&C insurance economy and derive value from connecting to others across the ecosystem through CCC.
In 2023, we launched offerings that expanded the breadth and depth of our solutions across a number of areas including claim handling with CCC First Look and Casualty Impact Dynamics, digital website building with CCC Amplify, repair estimating with AI capabilities within CCC ONE Estimating-IQ, and subrogation with CCC Inbound Subrogation, among others. • Broadening our network ecosystem : We have a large network of companies on our platform that are dependent on the P&C insurance economy and derive value from connecting to others across the ecosystem through CCC.
We have tens of thousands of companies on our platform that participate in the insurance economy, including insurers, repairers, parts suppliers, automotive manufacturers, and financial institutions.
We have prioritized building a leading network around our automotive insurance and collision repair pillars to further digitize interactions and maximize value for our customers. We have tens of thousands of companies on our platform that participate in the insurance economy, including insurers, repairers, parts suppliers, automotive manufacturers, and financial institutions.
We intend to continue to pursue targeted acquisition opportunities to accelerate our business strategy and growth through solution, market, or geographic expansion. Our Solutions We provide an integrated suite of software applications built on our cloud platform to serve the P&C insurance economy, including insurance, repair, and other end-markets.
Our Solutions We provide an integrated suite of software applications built on our cloud platform to serve the P&C insurance economy, including insurance, repair, and other end-markets. Our SaaS solutions are sold individually or in packages, depending on the specific solution and end-market.
To deliver end-to-end digital workflows and improved customer experiences, technology needs to extend beyond insurance organizations and include its supporting economy, in order to enable the many interactions and handoffs required to process insurance events. In the automotive insurance sector, which represents nearly half of the U.S.
Insurance carriers invest in data, systems, services and partnerships to manage the many required collaboration points across these industries. To deliver end-to-end digital workflows and improved customer experiences, technology needs to extend beyond insurance organizations and include its supporting economy, in order to enable the many interactions and handoffs required to process insurance events.
We were one of the leaders in the transition to cloud services, launching our initial CCC cloud capabilities beginning in 2003. Today, our solutions are 10 powered by our secure multi-tenant cloud.
Our Technology CCC has been a technology leader in the P&C insurance economy for several decades and has a strong track record of innovation. We were one of the leaders in the transition to cloud services, launching our initial CCC cloud capabilities beginning in 2003. Today, our solutions are powered by our secure multi-tenant public cloud.
We have dedicated implementation and training teams, and have proven success in implementing solutions for leading insurance carriers and thousands of small businesses. 7 Our Growth Strategy We intend to extend our position as the leading provider of SaaS solutions for the P&C insurance economy.
Our Growth Strategy We intend to extend our position as the leading provider of SaaS solutions for the P&C insurance economy.
Insurers are often reliant on legacy on-premise systems to assist with policy and claims adjustments and processing, which can be inflexible and costly to maintain, challenging their ability to innovate and respond to market dynamics.
Insurers are often reliant on legacy on-premise systems to assist with policy and claims adjustments and processing, which can be inflexible and costly to maintain, challenging their ability to innovate and respond to market dynamics. 5 Further complicating matters, the P&C insurance industry is dependent on the P&C insurance economy, an interconnected economy of industries that interact to service, underwrite, finance, and repair insured assets.
Our business has been built upon two foundational pillars: automotive insurance claims and automotive collision repair. For decades we have delivered leading software solutions to both the insurance and repair industries, including pioneering Direct Repair Programs (“DRP”) in the United States (“U.S.”) beginning in 1992.
For decades we have delivered leading software solutions to both the insurance and repair industries, including pioneering Direct Repair Programs (“DRP”) in the United States (“U.S.”) beginning in 1992. DRP connects auto insurers and collision repair shops to create business value for both parties, and requires digital tools to facilitate interactions and manage partner programs.
We are assessing other international market expansion opportunities by evaluating partnerships and acquisitions of strategic assets. Our international solutions represent approximately 1% of our 2022 total revenue, with 100% of that representing software revenue. Our Technology CCC has been a technology leader in the P&C insurance economy for several decades and has a strong track record of innovation.
Our software solutions are tailored for the Chinese market, and include workflow, estimating, audit and analytics solutions. We are assessing other international market expansion opportunities by evaluating partnerships and acquisitions of strategic assets. Our international solutions represent approximately 1% of our 2023 total revenue, with 100% of that representing software revenue.
Our repair solutions help collision repair facilities achieve better performance throughout the collision repair cycle by digitizing processes to drive business growth, streamline operations, and improve repair quality. We have more than 300 insurers on our network, connecting with over 28,000 repair facilities through our multi-tenant cloud platform.
Our software integrates seamlessly with both legacy and modern systems alike and enables insurers to rapidly innovate on our platform. Our repair solutions help collision repair facilities achieve better performance throughout the collision repair cycle by digitizing processes to drive business growth, streamline operations, and improve repair quality.
DRP connects auto insurers and collision repair shops to create business value for both parties, and requires digital tools to facilitate interactions and manage partner programs. Insurer-to-shop DRP connections have created a strong network effect for CCC’s platform, as insurers and repairers both benefit by joining the largest network to maximize opportunities.
Insurer-to-shop DRP connections have created a strong network effect for CCC’s platform, as insurers and repairers both benefit by joining the largest network to maximize opportunities. This has led to a virtuous cycle in which more insurers on the platform drives more value for the collision shops on the platform, and vice versa.
We believe similar opportunities exist in other markets across the world which we expect to pursue over time. • Pursuing acquisitions : We have acquired and integrated numerous businesses throughout CCC’s history. In 2022, we acquired Safekeep and integrated their digital subrogation capabilities into CCC's suite of insurance solutions.
For example, in China we have built an early position digitizing claims estimating processes with some of the largest automotive insurance carriers. We believe opportunities exist to expand our solutions in other markets across the world, which we expect to pursue over time. • Pursuing acquisitions : We have acquired and integrated numerous businesses throughout CCC’s history.
We provide a network management platform to automotive manufacturers including collaboration tools and reporting dashboards that empower data-driven management of certified repair shop networks. We enable the integration of up-to-date OEM repair methods and diagnostics trouble codes into our platform to give our network of repair facilities and technicians the tools to execute a proper repair.
We enable the integration of up-to-date OEM repair methods and diagnostics trouble codes into our platform to give our network of repair facilities and technicians the tools to execute a proper repair. Our automotive telematics solutions can enable new use cases across CCC’s integrated ecosystem, including connected safety and vehicle diagnostics solutions.
Mobile modules provide a digital channel for communicating with the modern consumer, starting with vehicle documentation when a new insurance policy is created. Our solutions support critical claims processes, including claims documentation, photo capture, repair scheduling, and two-way text communications. Our workflow solutions leverage a sophisticated rules engine to customize routing for escalations, review, and approval processes.
Our solutions support critical claims processes, including claims documentation, photo capture, repair scheduling, and two-way text communications. Our workflow solutions leverage sophisticated rules engines and AI to automate and customize routing, review, and approval processes.
Competition The P&C insurance economy software market is highly competitive and fragmented. This market is subject to changing technology, shifting customer needs, and introductions of new and innovative software solutions. Our competitors vary in size, breadth, and scope of their solutions.
Our software solutions and platform are designed to create value for our customers by boosting efficiency, improving cycle time, increasing innovation potential, and enhancing end-customer experiences. Competition The P&C insurance economy software market is highly competitive and fragmented. This market is subject to changing technology, shifting customer needs, and introductions of new and innovative software solutions.
There are numerous internally and externally developed insurance software solutions in the market today, with the vast majority of applications focused on insurance-only use cases and not on serving the broader insurance ecosystem. We have prioritized building a leading network around our automotive insurance and collision repair pillars to further digitize interactions and maximize value for our customers.
Our platform is designed to solve the “many-to-many” problem faced by the insurance economy. There are numerous internally and externally developed insurance software solutions in the market today, with the vast majority of applications focused on insurance-only use cases and not on serving the broader insurance ecosystem.
We believe our software is the architectural backbone of insurance DRP systems and is the primary driver of material revenue for our collision shop customers and a source of material efficiencies for our insurance carrier customers. Our platform is designed to solve the “many-to-many” problem faced by the insurance economy.
We have more than 300 insurers on our network, connecting with approximately 29,500 repair facilities through our multi-tenant cloud platform. We believe our software is the architectural backbone of insurance DRP systems and is a primary driver of material revenue for our collision shop customers and a source of material efficiencies for our insurance carrier customers.
None of our employees are represented by a labor union and we have not had any work stoppages. 12 We have continued to prioritize the health and safety of our employees, offering a flexible work model that balances business requirements and employee preferences.
We have continued to prioritize the health and safety of our employees, offering a flexible work model that balances business requirements and employee preferences. We believe this approach helped us continue to retain our current employees and remain competitive when hiring future talent.
Our annual performance management process embeds behavioral competencies holding our leaders accountable for maintaining highly engaged teams and supporting the development of others.
Our highly engaged workforce is a result of employees’ collective demonstration of our values—integrity, customer-focus, innovation, inclusion and diversity ("I&D"), tenacity, and connection—as well as our collaborative and results-oriented culture. Our annual performance management process embeds behavioral competencies holding our leaders accountable for maintaining highly engaged teams and supporting the development of others.
Our key insurance solutions include: 8 • CCC Workflow : Our suite of workflow tools support end-to-end digital insurance workflows, from customer intake to claim resolution. Our solutions enable mobile experiences, modern communications, configurable workflows, and network integrations, all while empowering insurers to seamlessly customize and configure solutions to meet unique business needs.
Our solutions enable mobile experiences, modern communications, configurable workflows, and network integrations, all while empowering insurers to seamlessly customize and configure solutions to meet unique business needs. Mobile solutions provide a digital channel for communicating with the modern consumer, starting with vehicle documentation when a new insurance policy is created.
Since January 2018, CCC’s systems have achieved 99.95% uptime on average, giving our customers the confidence to depend on CCC’s performance.
Since January 2019, CCC’s systems have achieved 99.94% uptime on average, giving our customers the confidence to depend on CCC’s performance. We have dedicated implementation and training teams, and have proven success in implementing solutions for leading insurance carriers and thousands of small businesses.
This has led to a virtuous cycle in which more insurers on the platform drives more value for the collision shops on the platform, and vice versa. We believe we have become a leading insurance and repair SaaS provider in the U.S. by increasing the depth and breadth of our SaaS offerings over many years.
We believe we have become a leading insurance and repair SaaS provider in the U.S. by increasing the depth and breadth of our SaaS offerings over many years. Our insurance solutions help insurance carriers manage mission-critical workflows across the claims lifecycle, while building smart, dynamic experiences for their own customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur leverage and the covenant restrictions under the 2021 Credit Agreement could have important consequences, including, without limitation: • making it more difficult for us to make payments on outstanding principal and interest owed under the 2021 Credit Agreement; • increasing our vulnerability to general economic and market conditions and to changes in the industries in which we compete; • requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest owed under the Credit Agreement, thereby reducing our ability to use our cash flow to fund our operations, future working capital, capital expenditures, investments or acquisitions, future strategic business opportunities, or other general corporate requirements; • restricting us from making acquisitions or causing us to make divestitures or similar transactions; • limiting our ability to obtain additional financing for the purpose of funding working capital, capital expenditures, debt service requirements, investments, acquisitions, and general corporate purposes; • limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged; and • increasing our cost of borrowing.
Biggest changeFor a description of our 2021 Credit Facilities (as defined below) see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt.” If we cannot generate sufficient cash flow from operations to service the 2021 Credit Facilities, we may need to refinance the 2021 Credit Facilities, dispose of assets, or issue equity to obtain necessary funds; we do not know whether we will be able to take any such actions on a timely basis or on terms satisfactory to us or at all. 29 Our leverage and the covenant restrictions under the 2021 Credit Agreement could have important consequences, including, without limitation: • making it more difficult for us to make payments on outstanding principal and interest owed under the 2021 Credit Agreement; • increasing our vulnerability to general economic and market conditions and to changes in the industries in which we compete; • requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest owed under the Credit Agreement, thereby reducing our ability to use our cash flow to fund our operations, future working capital, capital expenditures, investments or acquisitions, future strategic business opportunities, or other general corporate requirements; • restricting us from making acquisitions or causing us to make divestitures or similar transactions; • limiting our ability to obtain additional financing for the purpose of funding working capital, capital expenditures, debt service requirements, investments, acquisitions, and general corporate purposes; • limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged; and • increasing our cost of borrowing.
Our business activities are subject to the FCPA and similar anti-bribery and anti-corruption laws, regulations, or rules of other countries in which we operate, including the U.K. Bribery Act.
Our business activities are subject to the FCPA and other similar anti-bribery and anti-corruption laws, regulations, or rules of other countries in which we operate, including the U.K. Bribery Act.
Additionally, systems redundancies and disaster recovery and business continuity plans may not be sufficient to overcome the failures of third-party service providers hosting our SaaS solutions. In addition, the infrastructure that connects our networks to each other, or to the internet and other external networks, may become insufficient, including with respect to latency, capacity, reliability and connectivity.
Additionally, our systems redundancies and disaster recovery and business continuity plans may not be sufficient to overcome the failures of third-party service providers hosting our SaaS solutions. In addition, the infrastructure that connects our networks to each other, or to the Internet and other external networks, may become insufficient, including with respect to latency, capacity, reliability and connectivity.
Such covenants, which are generally customary and generally reflect market terms, restrict our ability to, among other things: • incur additional indebtedness; • create or incur liens; 29 • pay dividends and distributions on, or purchase, redeem, decrease, or otherwise acquire or retire for value, our capital stock; • make repayments or repurchases of debt that is contractually subordinated with respect to right of payment and/or security; • create negative pledges with respect to the Credit Facilities or restrictions on the payment of dividends or payment of other amounts owed from subsidiaries; • make acquisitions, investments, loans (including guarantees), advance or capital contributions; • engage in consolidations, amalgamations, mergers, liquidations, dissolutions, dispositions and/or sell, transfer, or otherwise dispose of assets, including capital stock of subsidiaries; • enter into certain sale and leaseback transactions; • engage in certain transactions with affiliates; • change our material lines of business; • modify certain documents governing certain debt that is subordinated with respect to right of payment; • change our fiscal year; and • conduct material operations at Holdings.
Such covenants, which are generally customary and generally reflect market terms, restrict our ability to, among other things: • incur additional indebtedness; • create or incur liens; • pay dividends and distributions on, or purchase, redeem, decrease, or otherwise acquire or retire for value, our capital stock; • make repayments or repurchases of debt that is contractually subordinated with respect to right of payment and/or security; • create negative pledges with respect to the Credit Facilities or restrictions on the payment of dividends or payment of other amounts owed from subsidiaries; • make acquisitions, investments, loans (including guarantees), advance or capital contributions; • engage in consolidations, amalgamations, mergers, liquidations, dissolutions, dispositions and/or sell, transfer, or otherwise dispose of assets, including capital stock of subsidiaries; • enter into certain sale and leaseback transactions; • engage in certain transactions with affiliates; • change our material lines of business; • modify certain documents governing certain debt that is subordinated with respect to right of payment; • change our fiscal year; and • conduct material operations at Holdings.
Potential risks and challenges associated with sales to customers and operations outside the U.S. include: • compliance with multiple conflicting and changing governmental laws and regulations, including employment, tax, money transmission, privacy, and data protection laws and regulations; • laws and business practices favoring local competitors; • new and different sources of competition; • securing new integrations for international technology platforms; • localization of our solutions, including translation into foreign languages, obtaining and maintaining local content, and customer care in such languages; • treatment of revenue from international sources and changes to tax rules, including being subject to foreign tax laws and liability for paying withholding or other taxes in foreign jurisdictions; • fluctuation of foreign currency exchange rates; • different pricing environments; • restrictions on the transfer of funds; • difficulties in staffing and managing foreign operations; • availability of reliable internet connectivity in areas targeted for expansion; • different or lesser protection of our intellectual property; • longer sales cycles; • natural disasters, acts of war, terrorism, pandemics, or security breaches; • import and export license requirements, tariffs, taxes and other trade barriers; • compliance with sanctions laws and regulations, including those administered by the Office of Foreign Assets Control (“OFAC”) of the U.S.
Potential risks and challenges associated with sales to customers and operations outside the U.S. include: • compliance with multiple conflicting and changing governmental laws and regulations, including employment, tax, money transmission, privacy, data protection, and AI laws and regulations; • laws and business practices favoring local competitors; • new and different sources of competition; • securing new integrations for international technology platforms; • localization of our solutions, including translation into foreign languages, obtaining and maintaining local content, and customer care in such languages; • treatment of revenue from international sources and changes to tax rules, including being subject to foreign tax laws and liability for paying withholding or other taxes in foreign jurisdictions; • fluctuation of foreign currency exchange rates; • different pricing environments; • restrictions on the transfer of funds; • difficulties in staffing and managing foreign operations; • availability of reliable Internet connectivity in areas targeted for expansion; • different or lesser protection of our intellectual property; • longer sales cycles; • natural disasters, acts of war, terrorism, pandemics, or security breaches; • import and export license requirements, tariffs, taxes and other trade barriers; • compliance with sanctions laws and regulations and trade embargos, including those administered by the Office of Foreign Assets Control (“OFAC”) of the U.S.
While we believe that we can partially mitigate the risk and severity of exposure from these lawsuits through contractual provisions in certain of our agreements with insurance carriers, and carrying our own insurance that we believe is adequate to cover adverse claims arising from these lawsuits or similar lawsuits that may be brought against us, we may not have 27 adequate contractual protection in all of our contracts and defending these and similar litigation is costly, diverts management from day-to-day operations, and could harm our brand and reputation.
While we believe that we can partially mitigate the risk and severity of exposure from these lawsuits through contractual provisions in certain of our agreements with insurance carriers, and carrying our own insurance that we believe is adequate to cover adverse claims arising from these lawsuits or similar lawsuits that may be brought against us, we may not have adequate contractual protection in all of our contracts and defending these and similar litigation is costly, diverts management from day-to-day operations, and could harm our brand and reputation.
As a result, we may overpay for, or otherwise not achieve some or any of the benefits, including anticipated synergies or accretion to earnings, that we expect to achieve in connection with our acquisitions, we may not accurately anticipate the fixed and other costs associated with such acquisitions, or the business may not achieve the performance we anticipated, any of which may materially adversely affect our business, prospects, financial condition, results of operations, cash flows, as well as our stock price.
As a result, we may overpay for, or otherwise not achieve some or any of the benefits, including anticipated synergies or accretion to earnings, that we 24 expect to achieve in connection with our acquisitions, we may not accurately anticipate the fixed and other costs associated with such acquisitions, or the business may not achieve the performance we anticipated, any of which may materially adversely affect our business, prospects, financial condition, results of operations, cash flows, as well as our stock price.
Even the perception that the privacy and/or security of personal information is not 26 satisfactorily managed, or does not meet applicable legal, regulatory and other requirements, could inhibit sales or adoption of our solutions, or could give rise to private class action, or claims by regulators, in each case potentially resulting in a negative impact on our sales and results from operations.
Even the perception that the privacy and/or security of personal information is not satisfactorily managed, or does not meet applicable legal, regulatory and other requirements, could inhibit sales or adoption of our solutions, or could give rise to private class action, or claims by regulators, in each case potentially resulting in a negative impact on our sales and results from operations.
Threats to our information technology security can take various 22 forms, including viruses, worms, and other malicious software programs that attempt to attack our solutions or platform or to gain access to the data of our customers or their customers. Non-technical means, for example, actions or omissions by an employee or trespasser, can also result in a security breach.
Threats to our information technology security can take various forms, including viruses, worms, and other malicious software programs that attempt to attack our solutions or platform or to gain access to the data of our customers or their customers. Non-technical means, for example, actions or omissions by an employee or trespasser, can also result in a security breach.
These providers could experience outages, delays and other difficulties due to system failures unrelated to our systems. Any of these events could adversely impact our business, results of operations and financial condition. 23 There may be adverse tax and/or employment law consequences if the independent contractor status of our consultants or the exempt status of our employees is successfully challenged.
These providers could experience outages, delays and other difficulties due to system failures unrelated to our systems. Any of these events could adversely impact our business, results of operations and financial condition. There may be adverse tax and/or employment law consequences if the independent contractor status of our consultants or the exempt status of our employees is successfully challenged.
Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, and may be difficult to detect for long periods of time, we or these third parties may be unable to anticipate these techniques or to implement adequate preventative measures.
Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, and may be difficult to detect for long periods of time, we or these third parties may be unable to 22 anticipate these techniques or to implement adequate preventative measures.
These requirements have increased our legal and financial compliance costs and have made and will make some activities more time-consuming and costly. We continuously evaluate the rules and regulations applicable to us a public company and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
These requirements have increased our legal and financial compliance costs and have made and will make some activities more time-consuming and costly. We continuously evaluate the rules and regulations applicable to us as a public company and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
In addition, 21 governments may adopt regulations, or courts may render decisions, requiring compulsory licensing of intellectual property to others, or governments may require that products meet specified standards that serve to favor local companies. Our inability to enforce our intellectual property rights under these circumstances may adversely impact our competitive position and our business.
In addition, governments may adopt regulations, or courts may render decisions, requiring compulsory licensing of intellectual property to others, or governments may require that products meet specified standards that serve to favor local companies. Our inability to enforce our intellectual property rights under these circumstances may adversely impact our competitive position and our business.
This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control of the Company, could deprive our stockholders an opportunity to receive a premium for their common stock as part of a sale of the Company and might ultimately affect the market price of our common stock.
This concentration of ownership may also have the effect of delaying, preventing or deterring a change in control, could deprive our stockholders an opportunity to receive a premium for their common stock as part of a sale and might ultimately affect the market price of our common stock.
Our future plans include significant investments to develop, improve and expand the functionality of our solutions, which we believe is necessary to maintain our 18 competitive position. However, we may not recognize significant revenue from these investments for several months or years, or the investments may not yield any additional revenue.
Our future plans include significant investments to develop, improve and expand the functionality of our solutions, which we believe is necessary to maintain our competitive position. However, we may not recognize significant revenue from these investments for several months or years, or the investments may not yield any additional revenue.
If we are unsuccessful in adapting to the requirements of new guidance, or in clearly explaining to stockholders how new guidance affects reporting of our results of operations, our stock price may decline. We prepare our consolidated financial statements to conform to U.S. Generally Accepted Accounting Principles (“GAAP”).
If we are unsuccessful in adapting to the requirements of new guidance, or in clearly explaining to stockholders how new guidance affects reporting of our results of operations, our stock price may decline. 27 We prepare our consolidated financial statements to conform to U.S. Generally Accepted Accounting Principles (“GAAP”).
In addition, we store personal information about our employees and, to a lesser extent, those who purchase products or services from our customers. We have security systems and information technology infrastructure designed to protect against unauthorized access to and disclosure of such information.
In addition, we store personal information about our employees and, to a lesser extent, those who purchase or utilize products or services from our customers. We have security systems and information technology infrastructure designed to protect against unauthorized access to and disclosure of such information.
We may incur substantial expense in complying with the new obligations to be imposed by new regulations and we may be required to make significant changes to our solutions and expanding business operations, all of which may adversely affect our business, results of operations or financial condition.
We may incur substantial expense in complying with the new obligations to be imposed by new regulations and we may be required 26 to make significant changes to our solutions and expanding business operations, all of which may adversely affect our business, results of operations or financial condition.
We have hired, and may continue to hire, additional accounting, finance, and other personnel in connection with our becoming, and our efforts to comply with the requirements of being, a public company, and our management and other personnel devote a substantial amount of time towards maintaining compliance with these requirements.
We have hired, and may continue to hire, additional accounting, finance, and other personnel in connection with our efforts to comply with the requirements of being, a public company. Our management and other personnel devote a substantial amount of time towards maintaining compliance with these requirements.
We are subject to U.S. trade laws and regulations, including economic sanctions, export controls, and import laws, as well as similar trade laws and regulations in other countries in which we operate. Failure to comply with global trade laws and regulations can result in penalties and/or reputational harm.
We are subject to increasing global trade laws and regulations. We are subject to U.S. trade laws and regulations, including economic sanctions, export controls, and import laws, as well as similar trade laws and regulations in other countries in which we operate. Failure to comply with global trade laws and regulations can result in penalties and/or reputational harm.
Our ability to further penetrate our existing markets and enter new markets depends on the quality of our solutions and our ability to design our solutions to meet changing consumer demands and industry standards, as well as our ability to assure that our customers will be satisfied with our existing and new solutions.
Our ability to further penetrate our existing markets and enter new markets depends on the quality of our solutions and our ability to design our solutions to meet changing consumer demands and industry standards, as well as our ability to adopt to new markets and assure that our customers will be satisfied with our existing and new solutions.
Other than our Chief Executive Officer, members of our Board of Directors who are affiliated with the Advent Investor, the OH Cypress Aggregator, L.P. (the “OH Investor”), or the TCV IX, L.P., TCV IX (A), L.P., TCV IX (B), L.P. or TCV Member Fund, L.P.
Other than our Chief Executive Officer, members of our Board who are affiliated with the Advent Investor, OH Cypress Aggregator, L.P. (the “OH Investor”), or TCV IX, L.P., TCV IX (A), L.P., TCV IX (B), L.P. or TCV Member Fund, L.P.
We may have direct or indirect dealings with those deemed by anti-corruption laws to be government officials, which also include interactions in countries known to experience corruption, including China.
We may have direct or indirect dealings with those deemed by anti-corruption laws to be government officials, which also include interactions in countries known or perceived to experience corruption, including China.
Many investment 24 funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a reputational or other factor in making an investment decision.
Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a reputational or other factor in making an investment decision.
Even if we are successful in defending our claims, litigation could result in substantial costs and diversion of resources and could negatively affect our business, reputation, results of operations and financial condition.
Even 21 if we are successful in defending our claims, litigation could result in substantial costs and diversion of resources and could negatively affect our business, reputation, results of operations and financial condition.
As a result, the market price of our common stock could decline, or stockholders might not receive a premium over the then-current market price of our common stock upon a change in control.
As a result, the market price of our common stock could decline, or stockholders might not receive a premium over the then-current market price of our common stock upon 31 a change in control.
These competitors may compete on the basis of price, the time and cost required for software implementation, custom development, or unique product features or functions. Outside of the U.S., we are more likely to compete against vendors that may differentiate themselves based on local advantages in language, market knowledge, existing relationships with customers and content applicable to that jurisdiction.
These competitors may compete on the basis of price, the time and cost required for software implementation, custom development, or unique solution features or functions. Outside of the U.S., we are more likely to compete against vendors that may differentiate themselves based on local advantages in language, market knowledge, existing relationships with customers and content applicable to that jurisdiction.
To manage our anticipated future operational expansion effectively, we must maintain, and expect to enhance, our IT infrastructure and financial and accounting systems and controls, and manage expanded operations and employees in geographically distributed locations. Our growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of new solutions.
To manage our anticipated future operational expansion effectively, we must maintain, and continue to enhance, our IT infrastructure and financial and accounting systems and controls, and manage expanded operations and employees in geographically distributed locations. Our growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of new solutions.
Our revenue is dependent on customers in the P&C insurance and automotive collision industries, and historically a relatively small number of customers have accounted for a significant portion of our revenue. There were no customers which individually accounted for more than 10% of total revenue during the year ended December 31, 2022.
Our revenue is dependent on customers in the P&C insurance and automotive collision industries, and historically a relatively small number of customers have accounted for a significant portion of our revenue. There were no customers which individually accounted for more than 10% of our total revenue during the year ended December 31, 2023.
The share price of our common stock may fluctuate due to a variety of factors, including, without limitation: • changes in the industries in which we and our customers operate; • variations in our operating performance and the performance of our competitors in general; • material and adverse impact of the COVID-19 pandemic on the markets and the broader global economy; 32 • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us or our competitors or industry; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; • additions and departures of key personnel; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of our shares of common stock available for public sale; and • general economic and political conditions such as recessions, interest rates, inflation, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism.
The share price of our common stock may fluctuate due to a variety of factors, including, without limitation: • changes in the industries in which we and our customers operate; • variations in our operating performance and the performance of our competitors in general; • material and adverse impact of pandemics and similar events on the markets and the broader global economy; • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us or our competitors or industry; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; • additions and departures of key personnel; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of our shares of common stock available for public sale; and • general economic and political conditions such as recessions, interest rates, inflation, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism.
If we are unable to internally develop or acquire suitable alternatives to such developments or otherwise deploy competitive offerings our business and growth opportunities may be challenged. Additionally, certain P&C insurance ecosystem customers may seek to develop internal solutions which could potentially compete with related offerings from us.
If we are unable to internally develop or acquire suitable alternatives to such developments or otherwise deploy competitive offerings our business and growth opportunities may be challenged. Additionally, certain P&C insurance ecosystem customers may seek to develop internal solutions which could potentially compete with related offerings from us in whole or part.
We have in the past and continue to spend considerable time and resources working with our customers to help them navigate these regulations, including Department of Insurance market conduct examinations and defending against class action lawsuits. If our solutions or services are found to be defective, we could be liable to them.
We have in the past and continue to spend considerable time and resources working with our customers to help them navigate these regulations, including Department of Insurance market conduct examinations and defending against class action lawsuits. If our solutions or services are found to be defective, we could be subject to liability.
The Company was not subject to the first lien leverage test as of December 31, 2022. We cannot guarantee that we will be able to maintain compliance with these covenants or, if we fail to do so, that we will be able to obtain waivers from the Administrative Agent and/or the required lenders and/or amend the covenants.
The Company was not subject to the first lien leverage test as of December 31, 2023. 30 We cannot guarantee that we will be able to maintain compliance with these covenants or, if we fail to do so, that we will be able to obtain waivers from the Administrative Agent and/or the required lenders and/or amend the covenants.
As a public company we will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company, including costs resulting from public company reporting obligations under the Securities Act, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and regulations regarding corporate governance practices.
As a public company we incur significant legal, accounting, and other expenses that we did not incur as a private company, including costs resulting from public company reporting obligations under the Securities Act, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and regulations regarding corporate governance practices.
(collectively, the “TCV Investor”), by the terms of our certificate of incorporation, will not be required to offer us any corporate opportunity of which they become aware and can take any such corporate opportunity for themselves or offer it to other companies in which they have an investment.
(collectively, the “TCV Investor”), by the terms of our certificate of incorporation, are not required to offer us any corporate opportunity of which they become aware and can take any such corporate opportunity for themselves or offer it to other companies in which they have an investment.
If our current or future third-party service providers are unable to keep up with our growing needs for capacity or any spikes in customer demand, it could have an adverse effect on our business. Our property and business interruption insurance coverage may not 28 be adequate to fully compensate us for losses that may occur.
If our current or future third-party service providers are unable to keep up with our growing needs for capacity or any spikes in customer demand, it could have an adverse effect on our business. Our contractual agreements with third party vendors, property and business interruption insurance coverage may not be adequate to fully compensate us for losses that may occur.
If it should be needed, a change in service provider for our data center housing or other third-party solutions would be costly and time-consuming to implement, which could negatively impact the operating results of CCC.
If it should be needed, a change in service provider for our data center housing or other third-party solutions would be costly and time-consuming to implement, which could negatively impact our operating results.
Certain trends in the automotive industry, including the continued adoption of semi-autonomous or autonomous vehicles and the advent of improved automotive safety features, may potentially impact the future market for, and operations of, the P&C insurance and automotive collision industries.
Certain trends in the automotive industry, including adoption of artificial intelligence solutions, the continued adoption of semi-autonomous or autonomous vehicles and the advent of improved automotive safety features, may potentially impact the future market for, and operations of, the P&C insurance and automotive collision industries.
Any prolonged slowdown in the Chinese economy may reduce the demand for our solutions and services and materially and adversely affect our business and results of operations. Our business activities are subject to the FCPA and similar anti-bribery and anti-corruption laws. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years.
A continued slowdown in the Chinese economy may reduce the demand for our solutions and services and materially and adversely affect our business and results of operations. Our business activities are subject to the FCPA and similar anti-bribery and anti-corruption laws. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years.
We are unable to predict the impact that a public health outbreak, epidemic or pandemic, including a resurgence in the COVID-19 pandemic, may have going forward on the business, results of operations or financial position of any of our major customers, which could impact each customer to varying degrees and at different times and could ultimately impact our own financial performance.
We are unable to predict the impact that a public health outbreak, epidemic or pandemic may have going forward on the business, results of operations or financial position of any of our major customers, which could impact each customer to varying degrees and at different times and could ultimately impact our own financial performance.
If we are unable to successfully grow our SaaS business and navigate our growth strategy in light of the foregoing uncertainties, our reputation could suffer and our results of operations may be impacted, which may cause our stock price to decline. Public health outbreaks, epidemics or pandemics, including the global COVID-19 pandemic, could harm our business and results of operations.
If we are unable to successfully grow our SaaS business and navigate our growth strategy in light of the foregoing uncertainties, our reputation could suffer and our results of operations may be impacted, which may cause our stock price to decline. Public health outbreaks, epidemics or pandemics could harm our business and results of operations.
In addition to the financial impacts, a transition of this type would be a complex effort, which could result in errors or service interruptions for customers and this type could require considerable staff and management’s attention being dedicated to the effort, potentially limiting CCC’s capacity for undertaking other project efforts.
In addition to the financial impacts, a transition of this type would be a complex effort, which could result in errors or service interruptions for customers and could require considerable staff and management’s attention being dedicated to the effort, potentially limiting our capacity for undertaking other projects.
For more information please see — “Public health outbreaks, epidemics or pandemics, including the global COVID-19 pandemic, could harm our business and results of operations.” This expansion and changing work environment have placed, and will continue to place, challenges on our operations and our personnel. We will also need to identify, add and retain additional qualified personnel across our operations.
For more information please see — “Public health outbreaks, epidemics or pandemics could harm our business and results of operations.” This expansion and changing work environment have placed, and will continue to place, challenges on our operations and our personnel. We will also need to identify, add and retain additional qualified personnel across our operations.
The majority of our eight (8) directors are independent directors, and our Board has an independent compensation committee (in addition to an independent audit committee). We utilize the exception to the requirement that our nominating and governance committee be composed entirely of independent directors.
The majority of our seven (7) directors are independent directors, and our Board has an independent compensation committee (in addition to an independent audit committee). We utilize the exception to the requirement that our nominating and governance committee be composed entirely of independent directors.
Additionally, the entry into new markets or the introduction of new features, functionality or applications beyond our current markets and functionality may not be successful.
Additionally, the entry into new markets or the introduction of new features, functionality or applications beyond our current markets and functionality, including new AI tools, may not be successful.
Any new markets in which we attempt to sell our solutions, including new countries or regions, may not be receptive or implementation may be delayed due to circumstances beyond our control, including economic and market factors, public health outbreaks, epidemics and pandemics, including the COVID-19 pandemic, natural disasters, war and terrorist attacks.
Any new markets in which we attempt to sell our solutions, including new countries or regions, may not be receptive or implementation may be delayed due to circumstances beyond our control, including economic and market factors, the applicable regulatory climate, public health outbreaks, epidemics and pandemics, natural disasters, war and terrorist attacks.
We have policies and controls intended to prevent these practices— e.g., a standalone Global Anti-Bribery Policy, Code of Ethics, mandatory anti-corruption trainings, financial controls, and a whistleblowing hotline, among others.
We have policies and controls intended to prevent these practices, including a Global Anti-Bribery Policy, Code of Ethics, mandatory anti-corruption trainings, financial controls, and a whistleblowing hotline, among others.
Some of these regulations relate directly to our software and services, including regulations governing the use of total loss and photo estimating software.
Some of these regulations relate directly to our software and services, including regulations governing the use of total loss, casualty claims processing, and photo estimating software.
Department of the Treasury; • the burdens and costs of complying with a wide variety of foreign laws and legal standards, including the General Data Protection Regulation (EU 2016/679) (“GDPR”) in the European Union (“EU”); • impact of Brexit on operations and growth of business in the European Union; • compliance with various anti-bribery and anti-corruption laws such as the U.S.
Department of the Treasury; • the burdens and costs of complying with a wide variety of foreign laws and legal standards, including the General Data Protection Regulation (EU 2016/679) (“GDPR”) in the European Union (“EU”); • compliance with various anti-bribery and anti-corruption laws such as the U.S.
As of December 31, 2022, our total debt outstanding under the 2021 Credit Agreement (as defined below) was $792 million under our Term B Loan (as defined below) and we had additional unused borrowing capacity under our 2021 Revolving Credit Facility (as defined below) of $249.3 million.
As of December 31, 2023, our total debt outstanding under the 2021 Credit Agreement (as defined below) was $784.0 million under our Term B Loan (as defined below) and we had additional unused borrowing capacity under our 2021 Revolving Credit Facility (as defined below) of $249.3 million.
For example, we have been named as co-defendants or as the primary defendant in several putative class action lawsuits, which generally allege that the total loss vehicle valuation generated by the Company’s total loss valuation solution undervalues the actual total loss incurred by the insured and improper adjustment of claims by insurance carriers.
For example, we have been named in several putative class action lawsuits, which generally allege that the total loss vehicle valuation generated by the Company’s total loss valuation solution undervalues the actual total loss incurred by the insured and improper adjustment of claims by insurance carriers.
Global events such as the imposition of various trade tariffs by the U.S. and China, public health outbreaks such as the COVID-19 pandemic, supply chain disruption, inflationary pressures, labor shortages and the war in Ukraine have created and may continue to create economic uncertainty, including inflationary pressures, in regions in which we have significant operations.
Global events such as the imposition of various trade tariffs by the U.S. and China, public health outbreaks such as the COVID-19 pandemic, supply chain disruption, inflationary pressures, labor shortages, global conflicts including the wars in Ukraine and the Middle East, and political transitions in the U.S. and globally have created and may continue to create economic uncertainty in regions in which we have significant operations.
Recently, there have been market indicators of a pronounced rise in inflation, which generally increases the costs of our business operations. We have a substantial number of long-term customer contracts, which means we cannot modify the prices paid by the customers under such contracts to pass along such increased costs.
Recently, there has been a pronounced rise in inflation in the U.S. and globally, which generally increases the costs of our business operations. We have a substantial number of long-term customer contracts, which means we cannot modify the prices paid by the customers under such contracts to pass along such increased costs.
Among other things, our governing documents include provisions regarding: • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • removal of the ability of our stockholders to take action by written consent in lieu of a meeting unless investment fund(s) affiliated with or managed by Advent International Corp. or any of its affiliates, or any successor, transferee or affiliate thereof, beneficially own a majority of the voting power of all of the then-outstanding shares of our capital stock entitled to vote on such action, or such action has been recommended or approved pursuant to a resolution approved by the affirmative vote of all of the directors then in office; • the requirement that a special meeting of stockholders may be called only by a majority of our entire board of directors, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; • the ability of our board of directors to amend our bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors, and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. 33 These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our board of directors or management.
Among other things, our governing documents include provisions regarding: • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; 33 • removal of the ability of our stockholders to take action by written consent in lieu of a meeting unless such action has been recommended or approved pursuant to a resolution approved by the affirmative vote of all of the directors then in office; • the requirement that a special meeting of stockholders may be called only by a majority of our entire board of directors, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; • the ability of our board of directors to amend our bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors, and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Additionally, as we continue to expand our business operations in China, we may engage with partners and third-party intermediaries who may have direct or indirect dealings with those deemed by anti-corruption laws to be government officials, further increasing the risk of violations of such laws that may result in fines and/or criminal sanctions against us, our officers, or our employees.
Any efforts to expand our business operations in China may include engaging with partners and third-party intermediaries who may have direct or indirect dealings with those deemed by anti-corruption laws to be government officials, further increasing the risk of violations of such laws that may result in fines and/or criminal sanctions against us, our officers, or our employees.
Additionally, we rely on hundreds of software programmers to design our proprietary technologies, and although we take steps to prevent our programmers from including objectionable open source software in the technologies and software code that they design, write and modify, we do not exercise complete control over the development efforts of our programmers and we cannot be certain that our programmers have not incorporated such open source software into our proprietary solutions and technologies or that they will not do so in the future.
Additionally, we rely on hundreds of software programmers to design our proprietary technologies, and although we take steps to prevent our programmers from including objectionable open source software in the technologies and software code that they design, write and modify, we do not exercise complete control over the development efforts of our programmers, the technical controls we have put in place may not be able to identify all instances of the incorporation of open source software, and we cannot be certain that our programmers have not incorporated such open source software into our proprietary solutions and technologies or that they will not do so in the future.
We may face reputational damage in the event our corporate responsibility initiatives or objectives, including with respect to diversity and inclusion, do not meet the standards set by our investors, shareholders, lawmakers, listing exchanges, credit rating agencies or other constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating from third-party rating services.
We may face reputational damage in the event our corporate responsibility initiatives or objectives, including with respect to diversity and inclusion, do not meet the standards set by our investors, shareholders, lawmakers, listing exchanges, credit rating agencies or other constituencies, if we are unable to achieve an acceptable ESG or sustainability rating from third-party rating services, or if we a viewed by certain investors, shareholders or third parties as putting too heavy a focus on ESG and/or sustainability initiatives.
Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers, or our employees, and liability for the actions of corrupt or other illegal activities of such third-party intermediaries, their employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. We are subject to increasing global trade laws and regulations.
Any violation of these laws and regulations could result in fines, criminal sanctions against us, our officers, or our employees, and liability for the actions of corrupt or other illegal activities of such third-party intermediaries, their employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
During the COVID-19 pandemic we transitioned to a hybrid working model of in-person and remote work, which brings new challenges to managing our business and work force that we generally expect to continue for the foreseeable future, including increased risk of cyberattacks due to more employees working remotely.
During the COVID-19 pandemic we transitioned to a hybrid working model of in-person and remote work, which brings challenges to managing our business and work force, including increased risk of cyberattacks due to more employees working remotely.
Many federal, regional, state, local and international legislatures and government agencies have imposed or are considering imposing restrictions and requirements regarding the collection, use, disclosure, and processing of personal data, including the CPRA.
Many federal, regional, state, local and international legislatures and government agencies have imposed or are considering imposing restrictions and requirements regarding the collection, use, disclosure, and processing of personal data, including the California Privacy Protection Agency and the Federal Trade Commission.
The uncertainty and evolving legal requirements in California and other jurisdictions may increase the cost of compliance, restrict our ability to offer services in certain locations or subject us to sanctions by federal, regional, state, local and international data protection regulators, all of which could adversely impact our business, results of operations or financial condition. 25 In addition, the GDPR took direct effect across the EU member states on May 25, 2018.
The uncertainty and evolving legal requirements in California and other jurisdictions may increase the cost of compliance, restrict our ability to offer services in certain locations or subject us to sanctions by federal, regional, state, local and international data protection regulators, all of which could adversely impact our business, results of operations or financial condition.
As a result, you may not have the same protections afforded to stockholders of companies that are subject to all Nasdaq rules regarding corporate governance. The share price of our common stock may be volatile.
Until we implement such requirement, you may not have the same protections afforded to stockholders of companies that are subject to all Nasdaq rules regarding corporate governance. The share price of our common stock may be volatile.
In addition, a significant portion of our operating costs are comprised of personnel-related expenses. We have experienced and may, in the future, experience increased labor costs as well as other costs necessary to conduct our business. To the extent we cannot pass along such increased costs to our customers, our results of operations and financial condition may be adversely affected.
We have experienced and may, in the future, experience increased labor costs as well as other costs necessary to conduct our business. To the extent we cannot pass along such increased costs to our customers, our results of operations and financial condition may be adversely affected.
For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. The growth rate of the Chinese economy has gradually slowed since 2010, and COVID-19 has had a severe and negative impact on the Chinese economy, which may continue.
For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. The growth rate of the Chinese economy has gradually slowed since 2010.
Corporate responsibility, specifically related to environmental, social and governance matters, may impose additional costs and expose us to new risks. Public ESG and sustainability reporting is becoming more broadly expected by investors, shareholders and other third parties.
Corporate responsibility, specifically related to environmental, social and governance matters, may impose additional costs and expose us to new risks. Public ESG and sustainability reporting is becoming more broadly expected by investors, shareholders and other third parties, while other investors, shareholders and third parties consider companies' focus on such efforts to be a distraction.
These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms. 31 As a public company, we will be required to provide management’s attestation on internal controls in the future pursuant to Sarbanes-Oxley Act Section 404.
These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.
Furthermore, our ability to effectively market and sell AI-based solutions to customers is partly dependent upon the pace at which enterprises undergo digital transformation.
Furthermore, our ability to effectively market and sell AI-based solutions to customers is partly dependent upon the pace at which enterprises undergo digital transformation as well as on our customers' (and their customers') acceptance of the use of AI.
As of and for the year ended December 31, 2022, we did not identify any material weaknesses in our internal control over financial reporting. If we identify one or more material weaknesses in the future, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
If we identify one or more material weaknesses in our internal control over financial reporting in the future, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
The timing of when we sign a large contract can materially impact our results of operations for the period and can be difficult to predict. Failure to manage our expanding operations effectively could harm our business.
The timing of when we sign a large contract can materially impact our results of operations for the period and can be difficult to predict. Failure to manage our expanding operations effectively could harm our business. We have expanded our operations over time and expect to continue to do so in the future.
Maintaining and enhancing our brand will depend largely on our ability to be a technology innovator, to continue to provide high quality solutions and protect and defend our brand names and trademarks, which we may not do successfully. We have not engaged in extensive direct brand promotion activities, and we may not successfully implement brand enhancement efforts in the future.
Maintaining and enhancing our brand will depend largely on our ability to be a technology innovator, to continue to provide high quality solutions and to protect and defend our brand names and trademarks, which we may not do successfully.
Our current and potential competitors may also establish cooperative relationships among themselves or with third parties to further enhance their resources and offerings. Current or potential competitors may be acquired by other vendors or third parties with greater available resources.
This may increase our costs more than we anticipate and may adversely impact our results of operations. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties to further enhance their resources and offerings. Current or potential competitors may be acquired by other vendors or third parties with greater available resources.
As a “controlled company” within the meaning of Nasdaq rules, we qualify for exemptions from certain corporate governance requirements. We have the opportunity to elect any of the exemptions afforded a controlled company.
Although we are no longer a “controlled company” within the meaning of the Nasdaq rules, we qualify for exemptions from certain corporate governance requirements until November 13, 2024. We have the opportunity to elect any of the exemptions afforded a controlled company until such date.
Furthermore, investors cannot waive compliance with the federal securities laws and rules and regulations thereunder. Item 1B. Unresolved Staff Comments None.
Furthermore, investors cannot waive compliance with the federal securities laws and rules and regulations thereunder.
For example, for so long as the Advent Investor continues to own a majority of the voting power of our capital stock, the Advent Investor could, acting alone, approve all matters requiring a stockholder vote, including, without limitation: the election of directors; mergers, consolidations and acquisitions; the sale of all or substantially all of our assets and other decisions affecting our capital structure; the amendment of our certificate of incorporation and our bylaws; and our winding up and dissolution.
For example, the Advent Investor could exercise significant influence over all matters requiring a stockholder vote, including, without limitation: the election of directors; mergers, consolidations and acquisitions; the sale of all or substantially all of our assets and other decisions affecting our capital structure; the amendment of our certificate of incorporation and our bylaws; and our winding up and dissolution.
If such rules are implemented, our profitability could be harmed if our employees leave to work for our competitors and we may also face increased allegations by third-parties that our employees have disclosed to us, or improperly used for our benefit, proprietary or confidential information of third parties, and may need to expend additional resources to protect our own proprietary and other confidential information.
If such rules are implemented, our profitability could be harmed if our employees leave to work for our competitors and we may also face increased allegations by third-parties that our employees have disclosed to us, or improperly used for our benefit, proprietary or confidential information of third parties, and may need to expend additional resources to protect our own proprietary and other confidential information. 28 Our ability to expand geographically depends, in large part, on our ability to attract, retain and integrate managers to lead the local business and employees with the appropriate skills.
We rely on data, technology, and intellectual property of third parties and our solutions rely on information generated by third parties and any interruption of our access to such information, technology, and intellectual property could materially harm our operating results.
We rely on data, technology, and intellectual property of third parties and our solutions rely on information generated by third parties and any interruption of our access to such information, technology, and intellectual property could materially harm our operating results. 20 We use data, technology, and intellectual property licensed from unaffiliated third parties in certain of our solutions, and we may license additional third-party data, technology, and intellectual property in the future.
Changes in the P&C insurance and automotive collision industries, including the adoption of new technologies, such as autonomous vehicles, may significantly impact our results of operations. Aspects of our business, and our customers’ businesses, which our solutions and services support, can be impacted by events in the P&C insurance and automotive collision industries which are beyond our control.
Aspects of our business, and our customers’ businesses, which our solutions and services support, can be impacted by events in the P&C insurance and automotive collision industries which are beyond our control.
Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. The controls implemented by our current or future third-party service providers may not prevent or timely detect system failures and we do not control the operations of third-party service providers that we use.
The controls implemented by our current or future third-party service providers may not prevent or timely detect system failures and we do not control the operations of third-party service providers that we use.
The GDPR seeks to harmonize national data protection laws across the EU, while at the same time, modernizing the law to address new technological developments.
In addition, the GDPR took direct effect across the EU member states on May 25, 2018. The GDPR seeks to harmonize national data protection laws across the EU, while at the same time, modernizing the law to address new technological developments.
Factors outside of our control including but not limited to natural catastrophes, war, and terrorism, may adversely impact the P&C insurance economy, preventing us from expanding or maintaining our existing customer base and increasing our revenue.
Factors outside of our control including but not limited to natural catastrophes, war, and terrorism, may adversely impact the P&C insurance economy, preventing us from expanding or maintaining our existing customer base and increasing our revenue. 15 Our largest customers are carriers who have experienced, and will likely experience in the future, losses from catastrophes, natural disasters or terrorism that may adversely impact their businesses.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties . Our corporate headquarters are located at 167 N. Green Street, Chicago, Illinois, where we occupy approximately 141,000 square feet of office space pursuant to a lease that expires in 2037. We maintain additional leased office spaces in various locations in the United States and China pursuant to leases that expire between 2023 and 2029.
Biggest changeItem 2. Properties . Our corporate headquarters are located at 167 N. Green Street, Chicago, Illinois, where we occupy approximately 141,000 square feet of office space pursuant to a lease that expires in 2037. We maintain additional leased office spaces in various locations in the United States and China pursuant to leases that expire between 2024 and 2029.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 24 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. Item 4. Mine Safety Disclosures . Not applicable. 34 PART II
Biggest changeSee Note 24 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. Item 4. Mine Safety Disclosures . Not applicable. 35 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur common stock is listed on Nasdaq under the symbol “CCCS”. As of February 24, 2023, we had 58 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Biggest changeThe actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
The graph assumes an initial investment of $100 in Dragoneer’s Class A ordinary shares at the market close on October 6, 35 2020. Such returns are based on historical results and are not intended to suggest future performance. Data for the NASDAQ Composite Index and S&P 500 Index assume reinvestment of dividends. Item 6. Reserved. 36
The graph assumes an initial investment of $100 in Dragoneer’s Class A ordinary shares at the market close on October 6, 36 2020. Such returns are based on historical results and are not intended to suggest future performance. Data for the NASDAQ Composite Index and S&P 500 Index assume reinvestment of dividends. Item 6. Reserved. 37
The following graph shows a comparison of the cumulative total return for our common stock, the NASDAQ Composite Index, and the Standard & Poor’s (S&P) 500 Index for the period from October 6, 2020, the first day Dragoneer’s Class A ordinary shares were traded on a stand-alone basis following its initial public offering through December 31, 2022.
The following graph shows a comparison of the cumulative total return for our common stock, the NASDAQ Composite Index, and the Standard & Poor’s (S&P) 500 Index for the period from October 6, 2020, the first day Dragoneer’s Class A ordinary shares were traded on a stand-alone basis following its initial public offering through December 31, 2023.
For the period between October 6, 2020 through July 30, 2021 the figures relate to Dragoneer’s Class A ordinary shares, and for the period between July 30, 2021 through December 31, 2022, the figures relate to CCC’s common stock.
For the period between October 6, 2020 through July 30, 2021 the figures relate to Dragoneer’s Class A ordinary shares, and for the period between July 30, 2021 through December 31, 2023, the figures relate to CCC’s common stock.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividends We have no current plans to pay cash dividends. The declaration, amount and payment of any future dividends on shares of our common stock will be at the sole discretion of our board of directors.
Dividends We have no current plans to pay cash dividends. The declaration, amount and payment of any future dividends on shares of our common stock will be at the sole discretion of our board of directors.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Secur ities. Securities On December 6, 2022, acting pursuant to authorization from our board of directors, we voluntarily withdrew the principal listing of our common stock from The New York Stock Exchange (“NYSE”) and transferred the listing to Nasdaq.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Secur ities. Securities Our common stock is listed on Nasdaq under the symbol “CCCS”. As of February 21, 2024, we had 33 holders of record of our common stock.
Removed
Purchases of Equity Securities by the Issuer None.
Added
Purchases of Equity Securities by the Issuer The table below presents our purchases of common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Purchase Price per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 2023 — — — — November 2023 32,500,000 $ 10.10625 — — December 2023 — — — — 32,500,000 $ 10.10625 — — (1) Excludes any fees, commissions or other expenses associated with the share repurchases.
Added
See Note 19 Capital Stock – Common Stock – Secondary Offering and Stock Repurchase to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue. 45 The following table reconciles net income (loss) to Adjusted EBITDA for the years ended December 31, 2022, 2021 and 2020: Year ended December 31, (dollar amounts in thousands) 2022 2021 2020 Net income (loss) $ 38,406 $ (248,919 ) $ (16,876 ) Interest expense 38,990 58,990 77,003 Interest income (908 ) — — Income tax provision (benefit) 11,456 (26,000 ) (4,679 ) Amortization of intangible assets 72,278 72,358 72,310 Amortization of acquired technologies—Cost of revenue 26,938 26,320 26,303 Depreciation and amortization related to software, equipment and property 27,933 24,451 17,749 EBITDA 215,093 (92,800 ) 171,810 Stock-based compensation expense and related employer payroll tax 111,865 261,995 11,336 Lease abandonment 6,137 2,582 — Contract termination costs 3,248 — — M&A and integration costs 1,772 — — Lease overlap costs 1,338 3,697 — Business combination transaction and related costs 1,330 12,385 1,188 Plaintiff litigation costs 894 — — Change in fair value of contingent consideration (100 ) — — (Income) costs related to divestiture, net (877 ) 2,177 35 Gain on sale of cost method investment (3,587 ) — — Change in fair value of derivative instruments (5,663 ) (8,373 ) 13,249 Change in fair value of warrant liabilities (26,073 ) 64,501 — Loss on early extinguishment of debt — 15,240 8,615 First Party Clinical Services—Revenue — — (34,742 ) First Party Clinical Services—Cost of revenue — — 31,313 Adjusted EBITDA $ 305,377 $ 261,404 $ 202,804 Adjusted EBITDA Margin 39 % 38 % 32 % Adjusted Net Income and Adjusted Earnings Per Share Adjusted Net Income is defined as net income (loss) adjusted for the after-tax effects of amortization, stock-based compensation expense and related employer payroll tax, lease abandonment charges, contract termination costs, M&A and integration costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, Business Combination transaction and related costs, litigation costs in legal matters in which the Company is the plaintiff, change in fair value of contingent consideration, net (income) costs related to divestiture, gain on sale of cost method investment, change in fair value of derivative instruments, change in fair value of warrant liabilities, loss on early extinguishment of debt, less revenue and related cost of revenue associated with First Party Clinical Services, which was divested as of December 31, 2020. 46 The following table reconciles net income (loss) to Adjusted Net Income and Adjusted Earnings per Share for the years ended December 31, 2022, 2021 and 2020.
Biggest changeThe following table reconciles net (loss) income to Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021: 47 Year ended December 31, (dollar amounts in thousands) 2023 2022 2021 Net (loss) income $ (90,071 ) $ 38,406 $ (248,919 ) Interest expense 63,577 38,990 58,990 Interest income (16,252 ) (908 ) — Income tax provision (benefit) 5,524 11,456 (26,000 ) Amortization of intangible assets 71,972 72,278 72,358 Amortization of acquired technologies—Cost of revenue 26,464 26,938 26,320 Depreciation and amortization related to software, equipment and property 8,577 10,161 12,511 Depreciation and amortization related to software, equipment and property—Cost of revenue 28,325 17,772 11,940 Stock-based compensation expense and related employer payroll tax 147,707 111,865 261,995 Goodwill and intangible asset impairment charges 82,742 — — Change in fair value of warrant liabilities 15,096 (26,073 ) 64,501 Change in fair value of derivative instruments 5,743 (5,663 ) — Change in fair value of interest rate swap agreements — — (8,373 ) Income from derivative instruments (6,460 ) — — Plaintiff litigation costs 5,068 894 — M&A and integration costs 3,372 1,772 — Business combination transaction and related costs, including secondary offering costs 2,031 1,330 12,385 Lease abandonment — 6,137 2,582 Contract termination costs — 3,248 — Lease overlap costs — 1,338 3,697 Change in fair value of contingent consideration — (100 ) — Gain on sale of cost method investment — (3,587 ) — (Income) costs related to divestiture, net — (877 ) 2,177 Loss on early extinguishment of debt — — 15,240 Adjusted EBITDA $ 353,415 $ 305,377 $ 261,404 Adjusted EBITDA Margin 41 % 39 % 38 % Adjusted Net Income and Adjusted Earnings Per Share We believe that Adjusted Net Income, as defined below, and Adjusted Earnings Per Share are useful in evaluating our operational performance distinct and apart from certain expenses that may not be indicative of our recurring core business operating results.
Intercompany transactions and balances are eliminated in consolidation. The consolidated financial statements include 100% of the accounts of wholly-owned and majority-owned subsidiaries and the ownership interest of the minority investor is recorded as a non-controlling interest in a subsidiary. The Company operates in one operating segment. The chief operating decision maker for the Company is the chief executive officer.
Intercompany transactions and balances are eliminated in consolidation. The consolidated financial statements include 100% of the accounts of wholly-owned and majority-owned subsidiaries. The ownership interest of the minority investor is recorded as a non-controlling interest in a subsidiary. The Company operates in one operating segment. The chief operating decision maker for the Company is the chief executive officer.
Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the related contractual renewal period. Amortization expense is included in selling and marketing expenses on the consolidated statements of operations and comprehensive income (loss).
Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the related contractual renewal period. Amortization expense is included in selling and marketing expenses on the consolidated statements of operations and comprehensive (loss) income.
Any change in fair value is recognized in our consolidated statements of operations and comprehensive income (loss). The fair value of the Private Warrants was determined using the Black-Scholes option pricing model.
Any change in fair value is recognized in our consolidated statements of operations and comprehensive (loss) income. The fair value of the Private Warrants was determined using the Black-Scholes option pricing model.
The change in working capital was primarily a result of an increase in other current assets of $12.3 million due to timing of payments for prepaid and other deferred costs, an increase in accounts receivable of $4.7 million due to revenue growth and an increase in the current portion of deferred contract costs of $3.1 million due to higher employee sales incentives, partially offset by an increase in accrued expenses of $8.3 million due to timing of payments, an increase in deferred revenue of $4.5 million due to revenue growth and timing of customer payments and an increase in income taxes of $3.8 million due to timing of payments.
The change in working capital was primarily a result of an increase in other current assets of $12.3 million due to timing of payments for prepaid and other deferred costs, an increase in accounts receivable of $4.7 million due to revenue growth and an increase in the current portion of deferred contract costs of $3.1 million due to higher employee sales incentives, partially offset by an increase in accrued expenses of $8.3 million due to timing of payments, an increase in 52 deferred revenue of $4.5 million due to revenue growth and timing of customer payments and an increase in income taxes of $3.8 million due to timing of payments.
See our reconciliation of net income to EBITDA and Adjusted EBITDA within the section titled “Non-GAAP Financial Measures.” Basis of Presentation The Company’s consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form 10-K include the accounts of the Company and its consolidated subsidiaries and were prepared in accordance with GAAP.
See our reconciliation of net (loss) income to Adjusted EBITDA within the section titled “Non-GAAP Financial Measures.” Basis of Presentation The Company’s consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form 10-K include the accounts of the Company and its consolidated subsidiaries and were prepared in accordance with GAAP.
Sales commissions for initial contracts are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to generally be between three and five years. We determined the period of benefit by taking into consideration our customer contracts, our technology, and other factors.
Sales commissions for initial contracts are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to generally be between three and five years. We determined the period of benefit by taking into consideration our customer contracts, our technology, 53 and other factors.
We calculate Software GDR by dividing (a) annualized software 38 revenue recorded in the last month of the measurement period in the prior year, reduced by annualized software revenue for unique billing accounts that are no longer customers as of the current period end by (b) annualized software revenue as of the corresponding month of the prior year.
We calculate Software GDR by dividing (a) annualized software revenue recorded in the last month of the measurement period in the prior year, reduced by annualized software revenue for unique billing accounts that are no longer customers as of the current period end by (b) annualized software revenue as of the corresponding month of the prior year.
The calculation excludes: (a) changes in estimates related to the timing of one-time revenue and other revenue, including professional services, and (b) annualized software revenue for smaller customers with annualized software revenue below the threshold of $100,000 for carriers and $4,000 for shops.
The calculation excludes: (a) changes in estimates related to the timing of one-time revenue and other revenue, including professional services, and (b) annualized 39 software revenue for smaller customers with annualized software revenue below the threshold of $100,000 for carriers and $4,000 for shops.
Income Tax (Provision) Benefit Income tax (provision) benefit consists of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. Earnings from our non-U.S. activities are subject to local country income tax and may be subject to current U.S. income tax.
Income Tax Provision Income tax provision consists of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. Earnings from our non-U.S. activities are subject to local country income tax and may be subject to current U.S. income tax.
We expect interest expense to vary each reporting period depending on the amount of outstanding indebtedness and prevailing interest rates. Interest Income Interest income comprises interest earned on our cash balances. We expect interest income to vary each reporting period depending on the amount of our cash balances in interest bearing accounts and prevailing interest rates.
We expect interest expense to vary each reporting period depending on the amount of outstanding indebtedness and prevailing interest rates. Interest Income Interest income comprises interest earned on our cash and cash equivalents balances. We expect interest income to vary each reporting period depending on the amount of our balances in interest bearing accounts and prevailing interest rates.
The calculation includes changes for these billing accounts, such as change in the solutions purchased, changes in pricing and transaction volume, but does not reflect revenue for new customers added.
The calculation includes changes for these billing accounts, such as changes in the solutions purchased, changes in pricing and transaction volume, but does not reflect revenue for new customers added.
For the years ended December 31, 2022, 2021 and 2020, the impact on revenue recognized in the respective period, from performance obligations partially or fully satisfied in the previous period, was not significant. Determine the amortizable life of contract assets Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer.
For the years ended December 31, 2023, 2022 and 2021, the impact on revenue recognized in the respective period, from performance obligations partially or fully satisfied in the previous period, was not significant. Determine the amortizable life of contract assets Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer.
Our Software NDR includes carriers and shops who subscribe to our auto physical damage solutions, which account for most of the Company’s revenue, and excludes revenue from smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers, diagnostic providers, and other automotive manufacturers, and also excludes CCC Casualty which are largely usage and professional service based solutions.
Our Software NDR includes carriers and shops who subscribe to our auto physical damage solutions, which account for most of the Company’s revenue, and excludes revenue from smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and also excludes CCC casualty solutions which are largely usage and professional service based.
Our Software GDR includes carriers and shops who subscribe to our auto physical damage solutions, which account for most of the Company’s revenue, and excludes revenue from smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers, diagnostic providers, and other automotive manufacturers, and excludes CCC Casualty which are largely usage and professional service based solutions.
Our Software GDR includes carriers and shops who subscribe to our auto physical damage solutions, which account for most of the Company’s revenue, and excludes revenue from smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and excludes CCC casualty solutions which are largely usage and professional service based.
Quarter Ending 2022 2021 2020 Software GDR March 31 99% 98% 98% June 30 99% 98% 98% September 30 99% 98% 98% December 31 99% 98% 98% Key Factors Affecting Operating Results The following are key factors affecting our operating results in the years ending December 31, 2022, 2021 and 2020: • Conversion and implementation of new customers: We focus significant resources on attracting and onboarding new customers across the various segments of the P&C insurance economy we serve.
Quarter Ending 2023 2022 2021 Software GDR March 31 99% 99% 98% June 30 99% 99% 98% September 30 98% 99% 98% December 31 99% 99% 98% Key Factors Affecting Operating Results The following are key factors affecting our operating results in the years ending December 31, 2023, 2022 and 2021: • Conversion and implementation of new customers: We focus significant resources on attracting and onboarding new customers across the various segments of the P&C insurance economy we serve.
The market condition of these awards impacts the fair value at grant date and is the reason the Monte Carlo simulation is utilized to determine fair value.
The market condition of these awards impacts the fair value at the grant date and is the reason the Monte Carlo simulation method is utilized to determine fair value.
Gain on Sale of Cost Method Investment Gain on sale of cost method investment is comprised of proceeds of the sale of the Company's equity interest in an investee in excess of our cost.
Gain on Sale of Cost Method Investment Gain on sale of cost method investment is comprised of proceeds from the sale of the Company's equity interest in an investee in excess of our cost.
Management's Discussion and Analysis of Financial Condition and Results of Operations located in our Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 1, 2022, for the discussion of the comparison of the year ended December 31, 2021 to the year ended December 31, 2020, the earliest of the three fiscal years presented in the consolidated financial statements.
Management's Discussion and Analysis of Financial Condition and Results of Operations located in our Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 1, 2023, for the discussion of the comparison of the year ended December 31, 2022 to the year ended December 31, 2021, the earliest of the three fiscal years presented in the consolidated financial statements.
For example, CCC's acquisition of Safekeep on February 9, 2022 added subrogation solutions that can span insurance lines including automotive, property, and worker's compensation. 37 We have strong customer relationships in the end-markets we serve, and these relationships are a key component of our success given the long-term nature of our contracts and the interconnectedness of our network.
For example, CCC's acquisition of Safekeep in February 2022 added subrogation solutions that can span insurance lines including automotive, property, and worker's compensation. We have strong customer relationships in the end-markets we serve, and these relationships are a key component of our success given the long-term nature of our contracts and the interconnectedness of our network.
Interest Rate Swaps —In June 2017, the Company entered into three floating to fixed interest rate swap agreements to reduce its exposure to the variability from future cash flows resulting from interest rate risk related to its floating rate long-term debt.
Interest Rate Swaps —In June 2017, the Company entered into three floating to fixed interest rate swap agreements (“Swap Agreements”) to reduce its exposure to the variability from future cash flows resulting from interest rate risk related to its floating rate long-term debt.
The Company generates revenue from subscription-based contracts that are billed either on a subscription or transactional basis. Revenue is derived from the sale of SaaS subscriptions, and other revenue, primarily professional services.
The Company generates revenue from subscription-based contracts that are billed either on a subscription or transactional basis. Revenue is derived from the sale of SaaS subscriptions, and other revenue, primarily professional and non-software services.
The increase in revenue was primarily a result of an 11% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.
The increase in revenue was primarily a result of an 8% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.
The estimates and assumptions requiring significant judgment under our revenue recognition policy in accordance with ASC 606 are as follows: Determine the transaction price The transaction price is determined based on the consideration to which we expect to be entitled in exchange for services to the customer.
The estimates and assumptions requiring significant judgment under our revenue recognition policy in accordance with ASC 606, Revenue from Contracts with Customers , are as follows: Determine the transaction price The transaction price is determined based on the consideration to which we expect to be entitled in exchange for services to the customer.
The interest rate per annum applicable to the loans under the 2021 Credit Facilities are based on a fluctuating rate of interest equal to the sum of an applicable rate and, at the Company’s election from time to time, either: (1) a base rate determined by reference to the highest of (a) the rate last quoted by the Wall Street Journal as the “prime rate,” (b) the federal funds effective rate plus 0.50%, (c) one-month LIBOR plus 1.00% and (d) with respect to the Term B Loan, 1.50% and with respect to the 2021 Revolving Credit Facility, 1.00%, or (2) a Eurocurrency rate determined by reference to LIBOR (other than with respect to Euros, Euribor and with respect to British Pounds Sterling, SONIA) with a term as selected by the Company, of one, three or six months (subject to (x) in the case of term loans, a 0.50% per annum floor and (y) in the case of revolving loans, a 0.00% per annum floor).
Prior to the execution of the Amendment, the interest rate per annum applicable to the loans was based on a fluctuating rate of interest equal to the sum of an applicable rate and, at the Company’s election from time to time, either: (1) a base rate determined by reference to the highest of (a) the rate last quoted by the Wall Street Journal as the “prime rate,” (b) the federal funds effective rate plus 0.50%, (c) one-month LIBOR plus 1.00% and (d) with respect to the Term B Loan, 1.50% and with respect to the 2021 Revolving Credit Facility, 1.00%, or (2) a Eurocurrency rate determined by reference to LIBOR (other than with respect to Euros, Euribor and with respect to British Pounds Sterling, SONIA) with a term as selected by the Company, of one, three or six months (subject to (x) in the case of term loans, a 0.50% per annum floor and (y) in the case of revolving loans, a 0.00% per annum floor).
As the business continues to grow, we expect sales and marketing expenses to increase in absolute dollars for the foreseeable future. 39 Components of Results of Operations Revenue Revenue is derived from the sale of SaaS subscriptions and other revenue, primarily professional services.
As the business continues to grow, we expect sales and marketing expenses to increase in absolute dollars for the foreseeable future. Components of Results of Operations Revenue Revenue is derived from the sale of SaaS subscriptions and other revenue, primarily professional and other non-software services.
Borrowings under the 2021 Revolving Credit Facility did not exceed 35% of the aggregate commitments and the Company was not subject to the leverage test during the year ended December 31, 2022. First Lien Credit Agreement —In April 2017, the Company entered into the First Lien Credit Agreement.
Borrowings under the 2021 Revolving Credit Facility did not exceed 35% of the aggregate commitments and the Company was not subject to the leverage test during the years ended December 31, 2023 and 2022. First Lien Credit Agreement —In April 2017, the Company entered into the First Lien Credit Agreement.
Therefore, we used an expected dividend yield of zero. See Note 21 to our consolidated financial statements for more information concerning certain of the specific assumptions we used in applying the Black-Scholes and Monte Carlo option pricing models to determine the estimated fair value of our stock-based awards with service vesting and performance vesting.
Therefore, we used an expected dividend yield of zero. See Note 21 to our consolidated financial statements for more information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model and Monte Carlo simulation method to determine the estimated fair value of our stock-based awards with service vesting and performance vesting.
We believe the following critical accounting policies affect our most significant judgments and estimates used in preparation of our consolidated financial statements: • Revenue Recognition • Valuation of Goodwill and Intangible Assets • Stock-based Compensation • Valuation of Warrant Liabilities • Fair Value of Contingent Consideration Revenue Recognition Revenue recognition requires judgment and the use of estimates.
We believe the following critical accounting policies affect our most significant judgments and estimates used in preparation of our consolidated financial statements: • Revenue Recognition • Valuation of Goodwill and Intangible Assets • Stock-based Compensation • Valuation of Warrant Liabilities Revenue Recognition Revenue recognition requires judgment and the use of estimates.
Quarter Ending 2022 2021 2020 Software NDR March 31 114% 106% 105% June 30 111% 110% 103% September 30 110% 113% 103% December 31 106% 115% 103% Software GDR We believe that Software GDR provides our management and our investors with insight into the value our solutions provide to our customers as represented by our ability to retain our existing customer base.
Quarter Ending 2023 2022 2021 Software NDR March 31 106% 114% 106% June 30 107% 111% 110% September 30 107% 110% 113% December 31 108% 106% 115% Software GDR We believe that Software GDR provides our management and our investors with insight into the value our solutions provide to our customers as represented by our ability to retain our existing customer base.
Our sales and marketing expenses totaled $119.6 million, $148.9 million and $74.7 million, in the years ended December 31, 2022, 2021 and 2020, respectively. In 2022, the decrease in our sales and marketing was primarily due to a reduction in stock-based compensation related to the Business Combination.
Our sales and marketing expenses totaled $140.9 million, $119.6 million and $148.9 million, in the years ended December 31, 2023, 2022 and 2021, respectively. In 2022, the decrease in our sales and marketing was primarily due to a reduction in stock-based compensation related to the Business Combination.
We have customer agreements with more than 300 insurers (including carriers, self-insurers and other entities processing insurance claims), including 18 of the top 20 automotive insurance carriers in the U.S. based on DWP, and hundreds of regional carriers.
We have customer agreements with more than 300 insurers (including carriers, self-insurers and other entities processing insurance claims), including 27 of the top 30 automotive insurance carriers in the U.S., 38 based on DWP, and hundreds of regional carriers.
Net cash used in financing activities was primarily related to principal payments of long-term debt of $1,336.2 million, dividends to shareholders prior to the Business Combination of $269.2 million and a deemed distribution to CCCIS option holders of $9.0 million, partially offset by borrowings from the Term B Loan, net of fees paid to the lender, of $789.9 million, and net proceeds from the Business Combination of $763.3 million. 2020 Net cash provided by operating activities was $103.9 million for the year ended December 31, 2020.
Net cash used in financing activities was primarily related to principal payments of long-term debt of $1,336.2 million, dividends to shareholders prior to the Business Combination of $269.2 million and a deemed distribution to CCCIS option holders of $9.0 million, partially offset by borrowings from the Term B Loan, net of fees paid to the lender, of $789.9 million, and net proceeds from the Business Combination of $763.3 million.
In September 2021, the Company made an aggregate payment of $10.0 million to extinguish the Swap Agreements which were scheduled to expire in June 2022.
On September 21, 2021, the Company made an aggregate payment of $10.0 million to extinguish the Swap Agreements that were scheduled to expire in June 2022.
We generally invoice software subscription agreements monthly either in advance or in arrears, over the subscription period. Software subscription revenue accounted for $752.5 million, $662.3 million and $573.6 million or 96%, 96% and 91% of total revenue during the years ended December 31, 2022, 2021 and 2020, respectively.
We generally invoice software subscription agreements monthly either in advance or in arrears, over the subscription period. Software subscription revenue accounted for $830.1 million, $752.5 million and $662.3 million or 96% of total revenue during the years ended December 31, 2023, 2022 and 2021, respectively.
Beginning with the quarter ending March 31, 2022, the Term B Loan requires quarterly principal payments of $2.0 million until June 30, 2028, with the remaining outstanding principal amount required to be paid on the maturity date, September 21, 2028.
The Term B Loan requires quarterly principal payments of $2.0 million until June 30, 2028, with the remaining outstanding principal amount required to be paid on the maturity date, September 21, 2028.
Valuation of Goodwill and Intangible Assets We perform an annual assessment for impairment of goodwill and indefinite-lived intangible assets each fiscal year, or whenever events occur or circumstances indicate that it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is below its carrying value. 51 The Company historically has performed its annual impairment assessment of goodwill and indefinite life intangible assets as of September 30 of each year.
Valuation of Goodwill and Intangible Assets We perform an annual assessment for impairment of goodwill and indefinite-lived intangible assets each fiscal year, or whenever events occur or circumstances indicate that it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is below its carrying value.
A quarterly commitment fee of up to 0.50% is payable on the unused portion of the 2021 Revolving Credit Facility. During the year ended December 31, 2022 and 2021, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 4.2% and 3.0%, respectively.
A quarterly commitment fee of up to 0.50% is payable on the unused portion of the 2021 Revolving Credit Facility. The 2021 Revolving Credit Facility matures on September 21, 2026. During the years ended December 31, 2023, 2022, and 2021 the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.5%, 4.2%, and 3.0%, respectively.
Complexity in the P&C insurance economy is driven by technological advancements, Internet of Things (“IoT”) data, new business models, supply chain disruption and changing consumer expectations. We believe digitization plays a critical role in managing this growing complexity while meeting consumer expectations.
One of the primary obstacles facing the P&C insurance economy is increasing complexity. Complexity in the P&C insurance economy is driven by technological advancements, IoT data, new business models, supply chain disruption and changing consumer expectations. We believe digitization plays a critical role in managing this growing complexity while meeting consumer expectations.
For stock-based awards with only performance conditions, we recognize stock-based compensation expense on a straight-line basis over the explicit performance period when the performance targets are probable of being achieved. We recognize stock-based compensation expense on awards that are subject to performance-based vesting with a market condition when the performance targets are considered probable of being achieved.
For stock-based awards with only performance conditions, we recognize stock-based compensation expense on a straight-line basis over the explicit performance period when the performance targets are probable of being achieved.
The following table reconciles net cash provided by operating activities to Free Cash Flow for the years ended December 31, 2022, 2021 and 2020: Year ended December 31, (dollar amounts in thousands) 2022 2021 2020 Net cash provided by operating activities $ 199,907 $ 127,335 $ 103,943 Less: Purchases of software, equipment, and property (47,951 ) (38,321 ) (30,107 ) Less: Purchase of intangible assets - (49 ) (560 ) Free Cash Flow $ 151,956 $ 88,965 $ 73,276 Liquidity and Capital Resources We have financed our operations with cash flows from operations.
The following table reconciles net cash provided by operating activities to Free Cash Flow for the years ended December 31, 2023, 2022 and 2021: Year ended December 31, (dollar amounts in thousands) 2023 2022 2021 Net cash provided by operating activities $ 250,033 $ 199,907 $ 127,335 Less: Purchases of software, equipment, and property (55,032 ) (47,951 ) (38,321 ) Less: Purchase of intangible assets — — (49 ) Free Cash Flow $ 195,001 $ 151,956 $ 88,965 Liquidity and Capital Resources We have financed our operations with cash flows from operations.
Beginning with the year ending December 31, 2022, the Term B Loan requires a prepayment of principal, subject to certain exceptions, in connection with the receipt of proceeds from certain asset sales, casualty events, and debt issuances by the Company, and up to 50% of annual excess cash flow, as defined in and as further set forth in the 2021 Credit Agreement.
Beginning with fiscal year ended December 31, 2022, if the Company's leverage ratio, as defined in the 2021 Credit Agreement is greater than 3.5, the Term B Loan requires a prepayment of principal, subject to certain exceptions, in connection with the receipt of proceeds from certain asset sales, casualty events, and debt issuances by the Company, and up to 50% of annual excess cash flow, as defined in and as further set forth in the 2021 Credit Agreement.
In 2022, our national carrier customers included 18 of the top 20 automotive insurers based on DWP, with average customer relationships spanning more than 10 years, as evidenced by our historical GDR of 98%-99%, and numerous exclusive arrangements. • Expansion of solution adoption from existing customers: A central part of our strategy is expanding solution adoption across our existing customer base.
In 2023, our national carrier customers included 27 of the top 30 automotive insurers based on DWP, with average customer relationships spanning more than 10 years, as evidenced by our historical Software GDR of 98%-99%. • Expansion of solution adoption from existing customers: A central part of our strategy is expanding solution adoption across our existing customer base.
In addition, beginning with the three months ended March 31, 2022, the terms of the 2021 Credit Agreement include a financial covenant which requires that, at the end of each fiscal quarter, if the aggregate amount of borrowings under the 2021 Revolving Credit Facility exceeds 35% of the aggregate commitments, the Company’s leverage ratio cannot exceed 6.25 to 1.00.
The terms of the 2021 Credit Agreement include a financial covenant which requires that, at the end of each fiscal quarter, if the aggregate amount of borrowings under the 2021 Revolving Credit Facility exceeds 35% of the aggregate commitments, the Company’s leverage ratio cannot exceed 6.25 to 1.00.
Recent Accounting Pronouncements 50 See Note 2 to our audited consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
Recent Accounting Pronouncements See Note 2 to our audited consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP.
During the years ended December 31, 2021 and 2020, the weighted-average interest rate on the outstanding borrowings under the First Lien Term Loan was 4.1% and 4.2% , respectively. The Company made interest payments of $36.1 million and $53.6 million during the years ended December 31, 2021 and 2020, respectively.
During the year ended December 31, 2021, the weighted-average interest rate on the outstanding borrowings under the First Lien Term Loan was 4.1%. The Company made interest payments of $36.1 million during the year ended December 31, 2021.
We have more than 30,000 total customers, including over 28,000 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), thousands of automotive dealers, 13 of the top 15 automotive manufacturers based on new vehicle sales, and numerous other companies that participate in the P&C insurance economy.
We have more than 35,000 total customers, including approximately 29,500 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), approximately 5,000 parts suppliers, 13 of the top 15 automotive manufacturers based on new vehicle sales, and numerous other companies that participate in the P&C insurance economy.
We generate revenue through the sale of SaaS subscriptions and other revenue, primarily from professional services. We generated $782.4 million of revenue for the year ended December 31, 2022, an increase of 13.7% from the prior year.
We generate revenue through the sale of software subscriptions and other revenue, primarily from professional services. We generated $866.4 million of revenue for the year ended December 31, 2023, an increase of 10.7% from the prior year.
Our Smart Suite of AI solutions increases automation across existing insurance and repair processes including vehicle damage detection, claim triage, repair estimating, and intelligent claims review. We deliver real-world AI with more than 100 U.S. auto insurers actively using AI-powered solutions in production environments.
Our AI solutions increase automation across existing insurance and repair processes including vehicle damage detection, claim triage, claim handling, repair estimating, intelligent claim review and claim subrogation. We deliver real-world AI with more than 100 U.S. auto insurers and more than 1,000 U.S. collision repairers actively using AI-powered solutions in production environments.
The gain recognized was due to the $3.9 million payment received in exchange for its equity interest in an investee as a result of the acquisition of the investee. The Company did not recognize any gain or loss on sale for cost method investment during the year ended December 31, 2021.
Gain on sale of cost method investment was $3.6 million for the year ended December 31, 2022. The gain recognized was due to the $3.9 million payment received in exchange for its equity interest in an investee as a result of the acquisition of the investee.
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures.
The preparation of these financial statements requires our management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures.
We expect cost of revenue, exclusive of amortization of acquired technologies, to increase in absolute dollars as we continue to hire personnel, require additional cloud infrastructure and incur royalty fees in support of our revenue growth. In December 2020, we sold our First Party Clinical Services to a third-party buyer.
We expect cost of revenues, exclusive of amortization and impairment of acquired technologies, to increase in absolute dollars as we continue to hire personnel, require additional cloud infrastructure and incur data licensing and royalty fees in support of our revenue growth.
The original estimate of an asset’s useful life and the impact of an event or circumstance on either an asset’s useful life or carrying value involve significant judgment regarding estimates of the future cash flows associated with each asset. There was no impairment charge recorded during the years ended December 31, 2022, 2021 and 2020.
The original estimate of an asset’s useful life and the impact of an event or circumstance on either an asset’s useful life or carrying value involve significant judgment regarding estimates of the future cash flows associated with each asset.
For stock-based awards with only service conditions, we recognize stock-based compensation expense on a straight-line basis over the requisite service period only for the portion of awards expected to vest, based on an estimated forfeiture rate.
The fair value of each award with performance-based vesting subject to a market condition is determined using a Monte Carlo simulation model. For stock-based awards with only service conditions, we recognize stock-based compensation expense on a straight-line basis over the requisite service period only for the portion of awards expected to vest, based on an estimated forfeiture rate.
We monitor conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization or depreciation period. We test these assets for potential impairment whenever our management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable.
We test these assets for potential impairment whenever our management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable.
The Company made interest payments of $33.5 million and $6.7 million during the year ended December 31, 2022 and 2021. The Company has an outstanding standby letter of credit for $0.7 million which reduces the amount available to be borrowed under the 2021 Revolving Credit Facility.
During the year ended December 31, 2021, the Company issued a standby letter of credit for $0.7 million which reduces the amount available to be borrowed under the 2021 Revolving Credit Facility and at December 31, 2023 and 2022, $249.3 million was available to be borrowed.
Net cash provided by operating activities consists of net loss of $16.9 million, adjusted for non-cash items and the effect of changes in working capital.
Net cash provided by operating activities consists of net loss of $90.1 million, adjusted for $341.0 million of non-cash items, $1.8 million for changes in working capital and $(2.7) million for the effect of changes in other operating assets and liabilities.
Income Tax (Provision) Benefit Income tax provision was $11.5 million for the year ended December 31, 2022, compared to an income tax benefit of $26.0 million for the year ended December 31, 2021.
Income Tax Provision Income tax provision is $5.5 million for the year ended December 31, 2023, compared to $11.5 million for the year ended December 31, 2022.
The company generated $199.9 million of cash flows from operating activities for the year-ended December 31, 2022. As of December 31, 2022, the Company had cash and cash equivalents of $323.8 million and a working capital surplus of $327.5 million.
The Company generated $250.0 million of cash flows from operating activities for the year ended December 31, 2023. As of December 31, 2023, the Company had cash and cash equivalents of $195.6 million and a working capital surplus of $197.1 million.
Year ended December 31, (dollar amounts in thousands) 2022 2021 2020 Net income (loss) $ 38,406 $ (248,919 ) $ (16,876 ) Amortization of intangible assets 72,278 72,358 72,310 Amortization of acquired technologies—Cost of revenue 26,938 26,320 26,303 Stock-based compensation expense and related employer payroll tax 111,865 261,995 11,336 Lease abandonment 6,137 2,582 — Contract termination costs 3,248 — — M&A and integration costs 1,772 — — Lease overlap costs 1,338 3,697 — Business combination transaction and related costs 1,330 12,385 1,188 Plaintiff litigation costs 894 — — Change in fair value of contingent consideration (100 ) — — (Income) costs related to divestiture, net (877 ) 2,177 35 Gain on sale of cost method investment (3,587 ) — — Change in fair value of derivative instruments (5,663 ) (8,373 ) 13,249 Change in fair value of warrant liabilities (26,073 ) 64,501 — Loss on early extinguishment of debt — 15,240 8,615 First Party Clinical Services—Revenue — — (34,742 ) First Party Clinical Services—Cost of revenue — — 31,313 Tax effect of adjustments (51,495 ) (73,684 ) (33,389 ) Adjusted net income $ 176,411 $ 130,279 $ 79,342 Adjusted net income per share attributable to common stockholders Basic $ 0.29 $ 0.24 $ 0.16 Diluted $ 0.27 $ 0.23 $ 0.15 Weighted average shares outstanding Basic 607,760,886 543,558,222 504,115,839 Diluted 642,841,596 575,619,243 519,748,819 Free Cash Flow Free Cash Flow is defined as net cash provided by operating activities less cash used for the purchases of software, equipment and property, and purchase of intangible assets.
Year ended December 31, (dollar amounts in thousands) 2023 2022 2021 Net (loss) income $ (90,071 ) $ 38,406 $ (248,919 ) Amortization of intangible assets 71,972 72,278 72,358 Amortization of acquired technologies—Cost of revenue 26,464 26,938 26,320 Stock-based compensation expense and related employer payroll tax 147,707 111,865 261,995 Goodwill and intangible asset impairment charges 82,742 — — Change in fair value of warrant liabilities 15,096 (26,073 ) 64,501 Change in fair value of derivative instruments 5,743 (5,663 ) — Change in fair value of interest rate swap agreements — — (8,373 ) Plaintiff litigation costs 5,068 894 — M&A and integration costs 3,372 1,772 — Business combination transaction and related costs, including secondary offering costs 2,031 1,330 12,385 Lease abandonment — 6,137 2,582 Contract termination costs — 3,248 — Lease overlap costs — 1,338 3,697 Change in fair value of contingent consideration — (100 ) — (Income) costs related to divestiture, net — (877 ) 2,177 Gain on sale of cost method investment — (3,587 ) — Loss on early extinguishment of debt — — 15,240 Tax effect of adjustments (59,638 ) (51,495 ) (73,684 ) Adjusted net income $ 210,486 $ 176,411 $ 130,279 Adjusted net income per share attributable to common stockholders Basic $ 0.34 $ 0.29 $ 0.24 Diluted $ 0.32 $ 0.27 $ 0.23 Weighted average shares outstanding Basic 617,889,384 607,760,886 543,558,222 Diluted 651,587,360 642,841,596 575,619,243 Free Cash Flow We believe that Free Cash Flow, as defined below, provides meaningful supplemental information regarding our ability to generate cash and fund our operations and capital expenditures.
We expect research and development expenses, excluding stock-based compensation, to increase in absolute dollars as we continue to dedicate substantial resources to develop, improve and expand the functionality of our solutions. We also expect an increase in the rate of capitalization of our investments in research and development for the foreseeable future.
We expect research and development expenses, excluding stock-based compensation, to increase in absolute dollars as we continue to dedicate substantial resources to develop, improve and expand the functionality of our solutions. Selling and Marketing Our selling and marketing expenses consist primarily of personnel-related costs for our sales and marketing functions, including sales commissions and stock-based compensation.
When a principal prepayment is required, the prepayment offsets the future quarterly principal payments of the same amount. For the year ended December 31, 2022, the annual excess cash flow calculation did not require the Company to make a prepayment of principal.
When a principal prepayment is required, the prepayment offsets the future quarterly principal payments of the same amount. As of December 31, 2023 and 2022, the Company's leverage ratio did not exceed the 3.5 threshold and the Company was not subject to the annual excess cash flow calculation, and as such, not required to make a prepayment of principal.
The following table reconciles operating income (loss) to Adjusted Operating Income for the years ended December 31, 2022, 2021 and 2020:: Year ended December 31, (dollar amounts in thousands) 2022 2021 2020 Operating income (loss) $ 51,922 $ (144,675 ) $ 76,980 Amortization of intangible assets 72,278 72,358 72,310 Amortization of acquired technologies—Cost of revenue 26,938 26,320 26,303 Stock-based compensation expense and related employer payroll tax 111,865 261,995 11,336 Lease abandonment 6,137 2,582 — Contract termination costs 3,248 — — M&A and integration costs 1,772 — — Lease overlap costs 1,338 3,697 — Business combination transaction and related costs 1,330 12,385 1,188 Plaintiff litigation costs 894 — — Change in fair value of contingent consideration (100 ) — — (Income) costs related to divestiture, net (877 ) 2,177 35 Adjusted operating income $ 276,745 $ 236,839 $ 188,152 Adjusted EBITDA Adjusted EBITDA is defined as net income (loss) adjusted for interest, taxes, depreciation, amortization, stock-based compensation expense and related employer payroll tax, lease abandonment charges, contract termination costs, M&A and integration costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, Business Combination transaction and related costs, litigation costs in legal matters in which the Company is the plaintiff, change in fair value of contingent consideration, net (income) costs related to divestiture, gain on sale of cost method investment, change in fair value of derivative instruments, change in fair value of warrant liabilities, loss on early extinguishment of debt, less revenue and related cost of revenue associated with First Party Clinical Services, which was divested as of December 31, 2020.
Adjusted Operating Income is defined as operating (loss) income adjusted for amortization, stock-based compensation expense and related employer payroll tax, goodwill and intangible asset impairment charges, lease abandonment charges, contract termination costs, M&A and integration costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, Business Combination transaction and related costs, including secondary offering costs, litigation costs in legal matters in which the Company is the plaintiff, change in fair value of contingent consideration and (income) costs related to divestiture, net. 46 The following table reconciles operating (loss) income to Adjusted Operating Income for the years ended December 31, 2023, 2022 and 2021: Year ended December 31, (dollar amounts in thousands) 2023 2022 2021 Operating (loss) income $ (23,925 ) $ 51,922 $ (144,675 ) Amortization of intangible assets 71,972 72,278 72,358 Amortization of acquired technologies—Cost of revenue 26,464 26,938 26,320 Stock-based compensation expense and related employer payroll tax 147,707 111,865 261,995 Goodwill and intangible asset impairment charges 82,742 — — Plaintiff litigation costs 5,068 894 — M&A and integration costs 3,372 1,772 — Business combination transaction and related costs, including secondary offering costs 2,031 1,330 12,385 Lease abandonment — 6,137 2,582 Contract termination costs — 3,248 — Lease overlap costs — 1,338 3,697 Change in fair value of contingent consideration — (100 ) — (Income) costs related to divestiture, net — (877 ) 2,177 Adjusted operating income $ 315,431 $ 276,745 $ 236,839 Adjusted EBITDA We believe that Adjusted EBITDA, as defined below, is useful in evaluating our operational performance distinct and apart from financing costs, certain expenses that may not be indicative of our recurring core business operating results and non-operational expenses.
The chief executive officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by type of service and geographic region, for purposes of allocating resources and evaluating financial performance.
The chief executive officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by type of service and geographic region, for purposes of allocating resources and evaluating financial performance. Recent Developments Secondary Offering —During January 2024, certain existing stockholders completed a secondary offering where the selling stockholders sold 22,000,000 shares of common stock.
We have tens of thousands of companies on our platform that participate in the insurance economy, including insurers, repairers, parts suppliers, automotive manufacturers, and financial institutions.
We have prioritized building a leading network around our automotive insurance and collision repair pillars to further digitize interactions and maximize value for our customers. We have tens of thousands of companies on our platform that participate in the insurance economy, including insurers, repairers, parts suppliers, automotive manufacturers, and financial institutions.
We may require additional borrowings under our credit arrangements and alternative forms of financings or investments to achieve our longer-term strategic plans. 47 Debt On September 21, 2021, CCC Intelligent Solutions Inc., an indirect wholly owned subsidiary of the Company, together with certain of the Company’s subsidiaries acting as guarantors entered into a credit agreement (the "2021 Credit Agreement").
Debt On September 21, 2021, CCC Intelligent Solutions Inc., an indirect wholly owned subsidiary of the Company, together with certain of the Company’s subsidiaries acting as guarantors entered into a credit agreement (the "2021 Credit Agreement").
The fair value of each service-based and performance-based RSU is determined using the fair value of the underlying common stock on the date of grant. The fair value of each award with performance-based with a market condition vesting is determined using a Monte Carlo simulation model.
Our stock-based awards have service-based vesting, performance-based vesting and performance-based vesting subject to a market condition. 54 The grant date fair value of our service-based awards, excluding RSUs, is determined using the Black-Scholes option-pricing model. The fair value of each service-based and performance-based RSU is determined using the fair value of the underlying common stock on the date of grant.
We expect our selling and marketing expenses, excluding stock-based compensation, to increase on an absolute dollar basis as we continue to increase investments to support the growth of our business.
Additional expenses include advertising costs, marketing costs and event costs, including the Company’s annual industry conference. We expect our selling and marketing expenses, excluding stock-based compensation, to increase in absolute dollars as we continue to increase investments to support the growth of our business.
Cost of Revenue Cost of revenue increased by $18.3 million to $213.9 million, or 9.3%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Cost of Revenues Cost of revenues increased by $16.3 million to $230.2 million, or 7.6%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
As of December 31, 2022, the Company had an accumulated deficit totaling $707.9 million and $792.0 million aggregate principal amount outstanding on term loans.
As of December 31, 2023, the Company had an accumulated deficit totaling $1,126.5 million and $784.0 million principal outstanding on our term loan.
Change in Fair Value of Warrant Liabilities Change in fair value of warrant liabilities comprises fair value adjustments of the Public Warrants and Private Warrants assumed in connection with the Business Combination.
Change in Fair Value of Warrant Liabilities Change in fair value of warrant liabilities comprises fair value adjustments of the Public Warrants and Private Warrants assumed in connection with the Business Combination. In December 2021, we redeemed all of our outstanding Public Warrants and none were outstanding as of December 31, 2021 or during subsequent periods.
The First Lien Credit Agreement initially consisted of a $1.0 billion term loan and revolving credit facilities for an aggregate principal amount of $100.0 million, with a sublimit of $30.0 million for letters of credit under the First Lien Revolvers.
The First Lien Credit Agreement initially consisted of a $1.0 billion term loan (“First Lien Term Loan”), a $65.0 million dollar revolving credit facility (“Dollar Revolver”), and a $35.0 million multicurrency revolving credit facility (“Multicurrency Revolver” and together with the Dollar Revolver, the “First Lien Revolvers”), with a sublimit of $30.0 million for letters of credit under the First Lien Revolvers.
The decrease was primarily due to a $83.8 million reduction in stock-based compensation, mainly from the vesting term modification completed in conjunction with the Business Combination in the prior year and a $5.0 million decrease in consulting and other professional service costs, partially offset by a $3.4 million increase in insurance costs and a $2.7 million increase due to loss on disposal of property and equipment associated with the closure of corporate office facilities.
The increase was primarily due to a $22.7 million increase in personnel-related costs, including $18.2 million of stock-based compensation, a $5.1 million increase in legal and other professional services costs, and a $2.8 million increase in IT costs, partially offset by a $3.3 million decrease in the Company's facilities costs, a $2.6 million loss on disposal of property and equipment mainly associated with the closure of corporate office facilities during the year ended December 31, 2022, and a $1.8 million decrease in general insurance costs.
Amortization of Intangible Assets Amortization of intangible assets was $72.3 million and $72.4 million during the years ended December 31, 2022 and 2021, respectively. Interest Expense Interest expense decreased by $20.0 million to $39.0 million, or 33.9%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Amortization of Intangible Assets Amortization of intangible assets was $72.0 million and $72.3 million during the years ended December 31, 2023 and 2022, respectively. Impairment of Goodwill and Intangible Assets We recorded impairment charges of goodwill and intangible assets of $77.4 million and $4.9 million, respectively, for the year ended December 31, 2023.
Selling and Marketing Selling and marketing expense decreased by $29.3 million to $119.6 million, or 19.7%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Selling and Marketing Selling and marketing expense increased by $21.3 million to $140.9 million, or 17.8%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
General and Administrative General and administrative expense decreased by $82.3 million to $167.8 million, or 32.9%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
General and Administrative General and administrative expense increased by $24.1 million to $191.8 million, or 14.4%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Amortization of Acquired Technologies Amortization of acquired technologies was $26.9 million and $26.3 million for the years ended December 31, 2022 and 2021, respectively. Gross Profit Gross profit increased by $75.9 million to $568.5 million, or 15.4%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Amortization of Acquired Technologies Amortization of acquired technologies was $26.5 million and $26.9 million for the years ended December 31, 2023 and 2022, respectively.
Adjusted Gross Profit Adjusted Gross Profit is defined as gross profit adjusted for amortization of acquired technologies, stock-based compensation and related employer payroll tax, contract termination costs, Business Combination transaction costs and the gross profit associated with First Party Clinical Services which was divested as of December 31, 2020, which are not indicative of our core business operating results.
Adjusted Gross Profit is defined as gross profit adjusted for amortization of acquired technologies, stock-based compensation and related employer payroll tax, impairment of acquired technologies, contract termination costs, and Business Combination transaction and related costs.
Stock-based Compensation The Company accounts for stock-based compensation plans in accordance with ASC 718, Compensation—Stock Compensation, which requires the recognition of expense measured based on the grant date fair value of the stock-based compensation awards. Our stock-based awards 52 include stock options, restricted stock units (“RSUs”) and phantom shares.
There was no impairment charge recorded during the years ended December 31, 2022 and 2021. Stock-based Compensation The Company accounts for stock-based compensation plans in accordance with ASC 718, Compensation—Stock Compensation , which requires the recognition of expense measured based on the grant date fair value of the stock-based awards.
Research and Development Research and development expense decreased by $9.0 million to $157.0 million, or 5.4%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Research and Development Research and development expense increased by $16.1 million to $173.1 million, or 10.3%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−1 removed2 unchanged
Biggest changeWe continuously monitor our interest rate exposure and have elected to use derivative instruments to manage interest rate risk associated with floating rate debt. In August 2022, we entered into two interest rate cap agreements to reduce our exposure to increases in interest rates applicable to its floating rate long-term debt.
Biggest changeIn contrast, lower interest rates may reduce our borrowing costs and improve our operational results. We continuously monitor our interest rate exposure and have elected to use derivative instruments to manage interest rate risk associated with floating rate debt. As of December 31, 2023, a 100-basis point increase in interest rates would increase annual interest expense by $7.8 million.
Although we have experienced and will continue to experience fluctuations in our net income (loss) as a result of transaction gains (losses) related to transactions denominated in currencies other than the U.S. dollar, we believe that a 10% change in foreign exchange rates would not have a material impact on our results of operations. 54
Although we have experienced and will continue to experience fluctuations in our net (loss) income as a result of transaction gains (losses) related to transactions denominated in currencies other than the U.S. dollar, we believe that a 10% change in foreign exchange rates would not have a material impact on our results of operations. 56
Interest rate fluctuations can affect the fair value of our floating rate debt, as well as earnings and cash flows. If market interest rates rise, our earnings and cash flows could be adversely affected by an increase in interest expense. In contrast, lower interest rates may reduce our borrowing costs and improve our operational results.
These market risks result primarily from changes in SOFR or prime rates. 55 Interest rate fluctuations can affect the fair value of our floating rate debt, as well as earnings and cash flows. If market interest rates rise, our earnings and cash flows could be adversely affected by an increase in interest expense.
Interest Rate Risk We are exposed to market risk related to changes in interest rates on $792.0 million of borrowings at December 31, 2022 that are floating rate obligations. These market risks result primarily from changes in LIBOR or prime rates and may be impacted by other reference rates upon the discontinuation of LIBOR in June 2023.
Interest Rate Risk We are exposed to market risk related to changes in interest rates on $784.0 million of borrowings at December 31, 2023 that are floating rate obligations.
The aggregate notional value of the interest rate cap agreements is $600.0 million with a cap rate of 4.0% and an expiration date of July 31, 2025.
To reduce our exposure to increases in interest rates applicable to our floating rate long-term debt, we have two interest rate cap agreements with an aggregate notional amount of $600.0 million and a one-month SOFR cap rate of 4.00% through their expiration in July 2025.
Removed
As of December 31, 2022, a 100-basis point increase in interest rates would increase annual interest expense by $1.9 million after considering the effect of this hypothetical change on our floating rate debt and interest rate cap agreements.

Other CCC 10-K year-over-year comparisons