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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to________________

CCC INTELLIGENT SOLUTIONS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware

001-39447

98-1546280

(State or other jurisdiction

of incorporation or organization)

(Commission

File Number)

(IRS Employer

Identification No.)

167 N. Green Street, 9th Floor

Chicago, Illinois

(Address Of Principal Executive Offices)

60607

(Zip Code)

(800) 621-8070

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	CCCS	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 29, 2022, 614,236,466 shares of common stock, $0.0001 par value per share, were issued and outstanding.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC.

Form 10-Q

For the Quarter Ended March 31, 2022

Table of Contents


		Page
PART I. FINANCIAL INFORMATION

	Cautionary Statement Regarding Forward-Looking Statements	3
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021	5
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2022 and 2021	6
	Unaudited Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity for the three months ended March 31, 2022 and 2021	7
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42
Item 4.	Controls and Procedures	42


PART II. OTHER INFORMATION		44
Item 1. Legal Proceedings		44
Item 1A. Risk Factors		44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities		44
Item 3. Defaults Upon Senior Securities		44
Item 5. Other Information		44
Item 6. Exhibits		44

In this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” the “Company” and “CCC” mean CCC Intelligent Solutions Holdings Inc. (formerly Dragoneer Growth Opportunities Corp.) and our subsidiaries. On July 30, 2021, Dragoneer Growth Opportunities Corp., a Cayman Islands exempted company (“Dragoneer” ), consummated a business combination (the “Business Combination”) pursuant to the terms of the Business Combination Agreement, dated as of February 2, 2021 (the “Business Combination Agreement”), as amended, by and among Dragoneer and Cypress Holdings Inc., a Delaware corporation (“CCCIS”). Immediately upon the consummation of the Business Combination and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”, and such completion the “Closing”), CCCIS merged with and into Chariot Merger Sub, a wholly-owned direct subsidiary of Dragoneer, with CCCIS surviving the Business Combination as a wholly-owned direct subsidiary of Dragoneer (the “Merger”). In connection with the Transactions, Dragoneer changed its name to “CCC Intelligent Solutions Holdings Inc.”

FORWARD-LOOKING STATEMENTS

The section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as other parts of this Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the future financial performance and business strategies and expectations for our business. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include information concerning our possible or assumed future results of operations, client demand, business strategies, technology developments, financing and investment plans, competitive position, our industry and regulatory environment, potential growth opportunities and the effects of competition.

Important factors that could cause actual results to differ materially from our expectations include:

•

our revenues, the concentration of our customers and the ability to retain our current customers;

•

our ability to negotiate with our customers on favorable terms;

•

our ability to maintain and grow our brand and reputation cost-effectively;

•

the execution of our growth strategy;

•

our projected financial information, growth rate and market opportunity;

•

the health of our industry, claim volumes, and market conditions;

•

changes in the insurance and automotive collision industries, including the adoption of new technologies;

•

global economic conditions and geopolitical events;

•

competition in our market and our ability to retain and grow market share;

•

our ability to develop, introduce and market new enhanced versions of our solutions and products;

•

our sales and implementation cycles;

•

the ability of our research and development efforts to create significant new revenue streams;

•

changes in applicable laws or regulations;

•

changes in international economic, political, social and governmental conditions and policies, including corruption risks in China and other countries;

•

currency fluctuations;

•

our reliance on third-party data, technology and intellectual property;

•

our ability to protect our intellectual property;

•

our ability to keep our data and information systems secure from data security breaches;

•

our ability to acquire or invest in companies or pursue business partnerships, which may divert our management’s attention or result in dilution to our stockholders, and we may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions, investments or partnership;

•

our ability to raise financing in the future and improve our capital structure;

•

our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•

our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

our financial performance;

•

our ability to expand or maintain its existing customer base; and

•

our ability to service our indebtedness.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described above and under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	March 31,			December 31,
	2022			2021
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	195,497		$	182,544
Accounts receivable—Net of allowances of $4,161 and $3,791 for March 31, 2022 and December 31, 2021, respectively		76,746			78,793
Income taxes receivable		71			318
Deferred contract costs		15,645			15,069
Other current assets		44,013			46,181
Total current assets		331,972			322,905
SOFTWARE, EQUIPMENT, AND PROPERTY—Net		139,801			135,845
OPERATING LEASE ASSETS		34,690			37,234
INTANGIBLE ASSETS—Net		1,193,275			1,213,249
GOODWILL		1,494,252			1,466,884
DEFERRED FINANCING FEES, REVOLVER—Net		2,746			2,899
DEFERRED CONTRACT COSTS		21,303			22,117
EQUITY METHOD INVESTMENT		10,228			10,228
OTHER ASSETS		36,630			26,165
TOTAL	$	3,264,897		$	3,237,526
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	16,935		$	12,918
Accrued expenses		50,257			66,691
Income taxes payable		27,366			7,243
Current portion of long-term debt		8,000			8,000
Current portion of long-term licensing agreement—Net		2,745			2,703
Operating lease liabilities		5,821			8,052
Deferred revenues		33,395			31,042
Total current liabilities		144,519			136,649
LONG-TERM DEBT—Net		778,996			780,610
DEFERRED INCOME TAXES—Net		254,208			275,745
LONG-TERM LICENSING AGREEMENT—Net		32,926			33,629
OPERATING LEASE LIABILITIES		56,378			56,133
WARRANT LIABILITIES		60,342			62,478
OTHER LIABILITIES		4,770			5,785
Total liabilities		1,332,139			1,351,029
COMMITMENTS AND CONTINGENCIES (Notes 19 and 20)
MEZZANINE EQUITY:
Redeemable non-controlling interest		14,179			14,179
STOCKHOLDERS’ EQUITY:
Preferred stock—$0.0001 par; 100,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock—$0.0001 par; 5,000,000,000 shares authorized; 613,758,126 and 609,768,296 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		61			61
Additional paid-in capital		2,653,201			2,618,924
Accumulated deficit		(734,377	)		(746,352	)
Accumulated other comprehensive loss		(306	)		(315	)
Total stockholders’ equity		1,918,579			1,872,318
TOTAL	$	3,264,897		$	3,237,526

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share data)

(Unaudited)


	For the Three Months Ended
	March 31,
	2022			2021
REVENUES	$	186,823		$	157,789
COST OF REVENUES
Cost of revenues, exclusive of amortization of acquired technologies		42,701			38,013
Amortization of acquired technologies		6,695			6,580
Total cost of revenues		49,396			44,593
GROSS PROFIT		137,427			113,196
OPERATING EXPENSES:
Research and development		35,681			30,624
Selling and marketing		26,802			19,417
General and administrative		44,207			37,839
Amortization of intangible assets		18,080			18,077
Total operating expenses		124,770			105,957
OPERATING INCOME		12,657			7,239
INTEREST EXPENSE		(7,341	)		(18,766	)
GAIN ON CHANGE IN FAIR VALUE OF INTEREST RATE SWAPS		—			3,277
GAIN ON SALE OF COST METHOD INVESTMENT		3,578			—
CHANGE IN FAIR VALUE OF WARRANT LIABILITIES		2,136			—
OTHER INCOME — Net		82			87
PRETAX INCOME (LOSS)		11,112			(8,163	)
INCOME TAX BENEFIT		863			3,079
NET INCOME (LOSS) INCLUDING NON-CONTROLLING INTEREST		11,975			(5,084	)
Less: net income (loss) attributable to non-controlling interest		—			—
NET INCOME (LOSS) ATTRIBUTABLE TO CCC INTELLIGENT SOLUTIONS HOLDINGS INC.	$	11,975		$	(5,084	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.02		$	(0.01	)
Diluted	$	0.02		$	(0.01	)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Basic		603,104,839			505,072,914
Diluted		641,028,410			505,072,914
COMPREHENSIVE INCOME (LOSS):
Net income (loss) including non-controlling interest		11,975			(5,084	)
Other comprehensive income—Foreign currency translation adjustment		9			7
COMPREHENSIVE INCOME (LOSS) INCLUDING NON-CONTROLLING INTEREST		11,984			(5,077	)
Less: comprehensive income (loss) attributable to non-controlling interest		—			—
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CCC INTELLIGENT SOLUTIONS HOLDINGS INC.	$	11,984		$	(5,077	)

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(In thousands, except number of shares)

(Unaudited)


	Redeemable
	Non-Controlling		Issued Preferred Stock													Accumulated
	Interest						Common Stock				Additional					Other			Total
			Number of		Par		Number of		Par		Paid-In		Accumulated			Comprehensive			Stockholders’
			Shares		Value		Shares		Value		Capital		Deficit			Loss			Equity
BALANCE—December 31, 2021	$	14,179		—	$	—		609,768,296	$	61	$	2,618,924	$	(746,352	)	$	(315	)	$	1,872,318
Stock-based compensation expense		—		—		—		—		—		23,644		—			—			23,644
Exercise of stock options—net of tax		—		—		—		3,961,270		—		10,633		—			—			10,633
Exercise of warrants—net		—		—		—		1,246		—		—		—			—			—
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		27,314		—		—		—			—			—
Foreign currency translation adjustment		—		—		—		—		—		—		—			9			9
Net income		—		—		—		—		—		—		11,975			—			11,975
BALANCE—March 31, 2022	$	14,179		—	$	—		613,758,126	$	61	$	2,653,201	$	(734,377	)	$	(306	)	$	1,918,579

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(In thousands, except number of shares)

(Unaudited)


	Redeemable
	Non-Controlling		Issued Preferred Stock													Accumulated
	Interest						Common Stock				Additional					Other			Total
			Number of		Par		Number of		Par		Paid-In		Accumulated			Comprehensive			Stockholders’
			Shares		Value		Shares		Value		Capital		Deficit			Loss			Equity
BALANCE—December 31, 2020	$	14,179		—	$	—		504,274,890	$	50		1,501,206	$	(129,370	)	$	(271	)	$	1,371,615
Issuance of common stock		—		—		—		110,679		—		1,007		—			—			1,007
Stock-based compensation expense		—		—		—		883,729		—		11,838		—			—			11,838
Exercise of stock options—net of tax		—		—		—		161,080		—		444		—			—			444
Dividend to CCCIS stockholders		—		—		—		—		—		—		(134,551	)		—			(134,551	)
Foreign currency translation adjustment		—		—		—		—		—		—		—			7			7
Net loss		—		—		—		—		—		—		(5,084	)		—			(5,084	)
BALANCE—March 31, 2021	$	14,179		—	$	—		505,430,378	$	50	$	1,514,495	$	(269,005	)	$	(264	)	$	1,245,276

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Three Months Ended
	March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	11,975		$	(5,084	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of software, equipment, and property		6,807			5,153
Amortization of intangible assets		24,775			24,657
Deferred income taxes		(21,223	)		(6,079	)
Stock-based compensation		23,644			12,654
Amortization of deferred financing fees		474			1,150
Amortization of discount on debt		65			194
Change in fair value of interest rate swaps