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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 June 30, 2023

OR

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 Nasdaq Stock Market LLC

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 July 28, 2023, 632,128,260 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 June 30, 2023

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 June 30, 2023 (unaudited) and December 31, 2022

5

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended June 30, 2023 and 2022

6

 

Unaudited Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022

7

 

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022

10

 

Notes to Condensed Consolidated Financial Statements

11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

44

Item 4.

Controls and Procedures

44

 

 

 

PART II. OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

45

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

45

Item 3.

Defaults Upon Senior Securities

45

Item 4.

Mine Safety Disclosures

45

Item 5.

Other Information

45

Item 6.

Exhibits

45

 

 

 

2


 

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 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;
the impact of public health outbreaks, epidemics or pandemics, including the global COVID-19 pandemic, on our business and results of operations;
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;
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;
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;
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 estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our ability to expand or maintain our 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

3


 

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. There may be additional risks that we consider immaterial or which are unknown. 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.

4


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

 

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

403,577

 

 

$

323,788

 

Accounts receivable—Net of allowances of $5,874 and $5,339 as of June 30, 2023 and
   December 31, 2022, respectively

 

 

96,139

 

 

 

98,353

 

Income taxes receivable

 

 

5,830

 

 

 

4,015

 

Deferred contract costs

 

 

16,871

 

 

 

16,556

 

Other current assets

 

 

29,240

 

 

 

36,358

 

Total current assets

 

 

551,657

 

 

 

479,070

 

SOFTWARE, EQUIPMENT, AND PROPERTY—Net

 

 

153,539

 

 

 

146,443

 

OPERATING LEASE ASSETS

 

 

31,647

 

 

 

32,874

 

INTANGIBLE ASSETS—Net

 

 

1,064,064

 

 

 

1,118,819

 

GOODWILL

 

 

1,417,724

 

 

 

1,495,129

 

DEFERRED FINANCING FEES, REVOLVER—Net

 

 

1,979

 

 

 

2,286

 

DEFERRED CONTRACT COSTS

 

 

19,480

 

 

 

20,161

 

EQUITY METHOD INVESTMENT

 

 

10,228

 

 

 

10,228

 

OTHER ASSETS

 

 

52,072

 

 

 

45,911

 

TOTAL

 

$

3,302,390

 

 

$

3,350,921

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

19,084

 

 

$

27,599

 

Accrued expenses

 

 

54,711

 

 

 

71,445

 

Income taxes payable

 

 

3,509

 

 

 

922

 

Current portion of long-term debt

 

 

8,000

 

 

 

8,000

 

Current portion of long-term licensing agreement—Net

 

 

2,967

 

 

 

2,876

 

Operating lease liabilities

 

 

7,049

 

 

 

5,484

 

Deferred revenues

 

 

40,064

 

 

 

35,239

 

Total current liabilities

 

 

135,384

 

 

 

151,565

 

LONG-TERM DEBT—Net

 

 

770,787

 

 

 

774,132

 

DEFERRED INCOME TAXES—Net

 

 

217,907

 

 

 

241,698

 

LONG-TERM LICENSING AGREEMENT—Net

 

 

29,246

 

 

 

30,752

 

OPERATING LEASE LIABILITIES

 

 

52,431

 

 

 

54,245

 

WARRANT LIABILITIES

 

 

55,585

 

 

 

36,405

 

OTHER LIABILITIES

 

 

1,550

 

 

 

2,658

 

Total liabilities

 

 

1,262,890

 

 

 

1,291,455

 

COMMITMENTS AND CONTINGENCIES (Notes 19 and 20)

 

 

 

 

 

 

MEZZANINE EQUITY:

 

 

 

 

 

 

Redeemable non-controlling interest

 

 

14,494

 

 

 

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; 631,982,491 and
   
622,072,905 shares issued and outstanding at June 30, 2023 and December 31,
   2022, respectively

 

 

63

 

 

 

62

 

Additional paid-in capital

 

 

2,829,184

 

 

 

2,754,055

 

Accumulated deficit

 

 

(803,106

)

 

 

(707,946

)

Accumulated other comprehensive loss

 

 

(1,135

)

 

 

(884

)

Total stockholders’ equity

 

 

2,025,006

 

 

 

2,045,287

 

TOTAL

 

$

3,302,390

 

 

$

3,350,921

 

 

See notes to condensed consolidated financial statements.

5


 

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except share and per share data)

(Unaudited)

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

REVENUES

 

$

211,710

 

 

$

192,786

 

 

$

416,630

 

 

$

379,609

 

COST OF REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues, exclusive of amortization and impairment of acquired technologies

 

 

52,047

 

 

 

46,095

 

 

 

102,494

 

 

 

88,795

 

Amortization of acquired technologies

 

 

6,646

 

 

 

6,750

 

 

 

13,331

 

 

 

13,445

 

Impairment of acquired technologies

 

 

431

 

 

 

 

 

 

431

 

 

 

 

Total cost of revenues

 

 

59,124

 

 

 

52,845

 

 

 

116,256

 

 

 

102,240

 

GROSS PROFIT

 

 

152,586

 

 

 

139,941

 

 

 

300,374

 

 

 

277,369

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

43,363

 

 

 

38,758

 

 

 

84,359

 

 

 

74,438

 

Selling and marketing

 

 

35,936

 

 

 

31,091

 

 

 

69,467

 

 

 

57,894

 

General and administrative

 

 

46,141

 

 

 

39,509

 

 

 

88,006

 

 

 

83,717

 

Amortization of intangible assets

 

 

18,022

 

 

 

18,066

 

 

 

36,088

 

 

 

36,146

 

Impairment of goodwill

 

 

77,405

 

 

 

 

 

 

77,405

 

 

 

 

Impairment of intangible assets

 

 

4,906

 

 

 

 

 

 

4,906

 

 

 

 

Total operating expenses

 

 

225,773

 

 

 

127,424

 

 

 

360,231

 

 

 

252,195

 

OPERATING (LOSS) INCOME

 

 

(73,187

)

 

 

12,517

 

 

 

(59,857

)

 

 

25,174

 

INTEREST EXPENSE

 

 

(14,014

)

 

 

(7,944

)

 

 

(27,846

)

 

 

(15,285

)

INTEREST INCOME

 

 

4,023

 

 

 

 

 

 

7,282

 

 

 

 

CHANGE IN FAIR VALUE OF DERIVATIVE INSTRUMENTS

 

 

3,613

 

 

 

 

 

 

1,009

 

 

 

 

CHANGE IN FAIR VALUE OF WARRANT LIABILITIES

 

 

(20,375

)

 

 

21,004

 

 

 

(19,180

)

 

 

23,140

 

GAIN ON SALE OF COST METHOD INVESTMENT

 

 

 

 

 

 

 

 

 

 

 

3,578

 

OTHER INCOME—Net

 

 

315

 

 

 

112

 

 

 

368

 

 

 

194

 

PRETAX (LOSS) INCOME

 

 

(99,625

)

 

 

25,689

 

 

 

(98,224

)

 

 

36,801

 

INCOME TAX BENEFIT (PROVISION)

 

 

2,281

 

 

 

(10,125

)

 

 

3,064

 

 

 

(9,262

)

NET (LOSS) INCOME INCLUDING NON-CONTROLLING
   INTEREST

 

 

(97,344

)

 

 

15,564

 

 

 

(95,160

)

 

 

27,539

 

LESS: ACCRETION OF REDEEMABLE NON-CONTROLLING INTEREST

 

 

(315

)

 

 

 

 

 

(315

)

 

 

 

NET (LOSS) INCOME ATTRIBUTABLE TO CCC INTELLIGENT
   SOLUTIONS HOLDINGS INC. COMMON STOCKHOLDERS

 

$

(97,659

)

 

$

15,564

 

 

$

(95,475

)

 

$

27,539

 

Net (loss) income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.16

)

 

$

0.03

 

 

$

(0.15

)

 

$

0.05

 

Diluted

 

$

(0.16

)

 

$

0.02

 

 

$

(0.15

)

 

$

0.04

 

Weighted-average shares used in computing net (loss) income per share
   attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

621,235,776

 

 

 

605,948,628

 

 

 

618,740,340

 

 

 

604,534,589

 

Diluted

 

 

621,235,776

 

 

 

639,964,696

 

 

 

618,740,340

 

 

 

640,650,297

 

COMPREHENSIVE (LOSS) INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income including non-controlling interest

 

 

(97,344

)

 

 

15,564

 

 

 

(95,160

)

 

 

27,539

 

Other comprehensive income (loss)—Foreign currency translation
   adjustment

 

 

(285

)

 

 

(303

)

 

 

(251

)

 

 

(294

)

COMPREHENSIVE (LOSS) INCOME INCLUDING
   NON-CONTROLLING INTEREST

 

 

(97,629

)

 

 

15,261

 

 

 

(95,411

)

 

 

27,245

 

Less: accretion of redeemable non-controlling interest

 

 

(315

)

 

 

 

 

 

(315

)

 

 

 

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO CCC
   INTELLIGENT SOLUTIONS HOLDINGS INC. COMMON STOCKHOLDERS

 

$

(97,944

)

 

$

15,261

 

 

$

(95,726

)

 

$

27,245

 

See notes to condensed consolidated financial statements.

6


 

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

 

 

 

Preferred Stock—Issued and Outstanding

 

 

Common Stock—Issued and Outstanding

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

 

 

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, 2022

 

$

14,179

 

 

 

 

 

 

$

 

 

 

622,072,905

 

 

$

62

 

 

$

2,754,055

 

 

$

(707,946

)

 

$

(884

)

 

$

2,045,287

 

  Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,930

 

 

 

 

 

 

 

 

 

28,930

 

  Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

3,214,093

 

 

 

1

 

 

 

8,242

 

 

 

 

 

 

 

 

 

8,243

 

  Issuance of common stock under
   employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

179,338

 

 

 

 

 

 

1,326

 

 

 

 

 

 

 

 

 

1,326

 

  Issuance of common stock upon
   vesting of RSUs—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

2,217,379

 

 

 

 

 

 

(11,449

)

 

 

 

 

 

 

 

 

(11,449

)

  Foreign currency translation
   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34

 

 

 

34

 

  Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,184

 

 

 

 

 

 

2,184

 

BALANCE—March 31, 2023

 

 

14,179

 

 

 

 

 

 

 

 

 

 

627,683,715

 

 

 

63

 

 

 

2,781,104

 

 

 

(705,762

)

 

 

(850

)

 

 

2,074,555

 

  Stock-based compensation expense