CCC Intelligent Solutions Holdings Inc Announces Acquisition of EvolutionIQ Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Joshua Baer - Morgan Stanley - Analyst : Great, thanks. And congrats on the acquisition. I was hoping you could talk a little bit about the history of your relationship with EvolutionIQ. Just wondering any color around the deal, how it came together, when it came together?

Question: Joshua Baer - Morgan Stanley - Analyst : Yeah, it does. Thank you. Could you help us out a little bit? Obviously -- well, I'm not familiar with sort of the history of this company. Just wondering like what this company look like pre Gen AI? And did that represent an inflection point for some of their AI capabilities?

Question: Joshua Baer - Morgan Stanley - Analyst : Thanks Githesh. Last one just for Brian. You talked about -- or you mentioned the 7% to 10% organic growth target. So I guess, first, are you reiterating that range for the core? And then are you saying that, that implies an 8% to 12% new range starting in 2026? Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah. Hey Josh. So first, we are reiterating the confidence in our long-term range for core CCC. So 7% to 10% as we've talked about. We've given a couple of data points within it. So in '25, we're saying that EvolutionIQ will contribute about $45 million to $50 million of revenue. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / 1:00PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc Announces Acquisition of EvolutionIQ Call So that's how to think about '25 incremental to our guide. Then we say, for the next couple of years after '25, expect to contribute another 1 points to 2 points of incremental growth beyond our existing long-term range of 7% to 10%. So that's how to think about it a couple of years after '25.

Question: Michael Funk - Bank of America - Analyst : Yeah. Thank you all for the call this morning. A couple if I could. So Githesh, you mentioned that EvolutionIQ's AI can help to improve and enhance existing CCC's solutions. Can you expand on that for me? And then how long do you think to train EvolutionIQ's AI to expand into some of your existing claims management and auto solutions?

Question: Michael Funk - Bank of America - Analyst : So it is a way to think about it then in addition to the $45 million or $50 million, if potentially some revenue synergy to drive faster adoption of your technologies and casualty and then also applicable across your other solutions with next best actions. And that might be a longer term benefit, but potentially some revenue synergy here as well?

Question: Michael Funk - Bank of America - Analyst : Okay, great. Thank you, Githesh. And was it a competitive bidding process or was this a longer stay in your relationship as you implied earlier, And you came together and realized it was the best outcome for both?

Question: Michael Funk - Bank of America - Analyst : Okay. And Brian, can you just clarify for second on the press release, it said, EBITDA dilutive, if I read it correctly, I think your prepared comments, you said that EvolutionIQ is EBITDA negative. So I want to make sure understood that just given the difference between the two. Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah. So the way to think about it, Mike, is in '25, you will have a modest EBITDA loss and that's driven from integration cost, but also just investing in the business as it continues to scale. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / 1:00PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc Announces Acquisition of EvolutionIQ Call That said it's got a positive cash flow contribution in '25. When you look at the business, it's got gross profit similar to ours and the unit economics are very attractive. So as the business continues to scale, it will start to deliver positive EBITDA growth. And when we get into '26, we expect to return to our previous cadence of 100 basis points per year margin expansion as we progress towards our goal of mid 40s, EBITDA margin.

Question: Michael Funk - Bank of America - Analyst : Absolutely, well understood. Thank you Githesh. While I have you guys quickly, any update on the adoption of your own emerging solutions, I think last quarter, you said, little slower adoption as customers continue to evaluate certainly long term outlook intact, but any update on that.

Question: Michael Funk - Bank of America - Analyst : Great. Thank you all for the questions and happy holiday at all. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / 1:00PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc Announces Acquisition of EvolutionIQ Call Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah. Happy holiday Mic.

Question: Gabriela Borges - Goldman Sachs - Analyst : Hey, good morning. Thank you for taking the question. Githesh, I was hoping you could expand a little bit more on your comments on how EvolutionIQ helps you in casualty. I know CCC is being strong on the property side for basically since the founding of the company. So I'd love to hear a little bit about what your strategy to expand into casualty looks like now versus what it might have looked like without EvolutionIQ? Thank you.

Question: Gabriela Borges - Goldman Sachs - Analyst : Yeah, that makes sense. Well, maybe then the follow up is on the competitive environment and medical summarization. You have slide 8. It sounds like it's mostly manual as an alternative. If customers are not using EvolutionIQ for medical summarization, what are they doing? And how do you think about the GAAP in functionality between their medical summarization versus what their competitors are doing? Thank you.

Question: Gabriela Borges - Goldman Sachs - Analyst : That makes sense. Thank you very much.

Question: Samad Samana - Jefferies - Analyst : Hi, good morning. And thank you for taking my questions. Maybe first, just obviously, the net retention is really impressive at EvolutionIQ. Can you maybe help us unpack that between claims volume growth, complexity growth selling back into the base. Just help us understand how that 150% is composed? Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah, happy to. Hey Samad, it's Brian. Yeah, so it's a great metric. We're super impressed with it. I think the other thing is what, as Githesh said it's a relatively new company. They've been around for five years and they have these great client relationships with some of the largest carriers in disability. So they're at 7 of the top 15. The growth has really come in a couple different ways. I mean, one is as they've rolled it out and taken smaller sets of their claims and rolled it out to the entire claim population, you get growth off that. They've also rolled out additional modules. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / 1:00PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc Announces Acquisition of EvolutionIQ Call So they'll sell one module into a client, prove that module out show the strong ROI and then they're able to cross sell additional modules into that client. So that selling motion has been very strong and really driving the strong NDR of over 150%. So yeah, we're excited about that, and you expect more to come.

Question: Samad Samana - Jefferies - Analyst : Great, well, happy holidays, excited for you guys and thank you for taking my questions, take care.

Question: Kirk Materne - Evercore ISI - Analyst : Yeah. Thanks for taking the question and happy holidays, Githesh, sorry if you brought this up at the beginning, it was a few minutes late. But how do you envision just sort of the go to market with EvolutionIQ and your casualty business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / 1:00PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc Announces Acquisition of EvolutionIQ Call I assume you're going to leave EvolutionIQ largely independent. To start, I guess how do you think about sort of the synergies, the branding? Like how do you want that to unfold over the next couple of years?

Question: Kirk Materne - Evercore ISI - Analyst : Makes sense. And then Brian two quick ones for you, on the revenue guide for evolution next year, I assume that's largely just their business, not any assumptions of synergies or anything like that this point in time. Or can you just give us some idea of how you kind of got to that number? Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah, that's right. I mean, we're guiding to largely their business and what they're going to deliver based on the forecast and kind of their CAR as they exit the year. And then as Githesh said, there's certainly a revenue synergy opportunity that we're really excited about, but it's not meaningful in the '25 positions.

Question: Kirk Materne - Evercore ISI - Analyst : Okay, great. Congrats on the acquisition. Happy holidays. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / 1:00PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc Announces Acquisition of EvolutionIQ Call

Question: Gary Prestopino - Barrington Research - Analyst : Hey, good morning, Githesh and Brian and congratulations on this transaction. Couple of quick questions. First of all, I would assume that this is priced on a subscription basis. It's not based on a proclaims basis. Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah, Gary, hey, it's Brian. Yes, exactly. It's a SaaS revenue model. It looks very much like ours where they come up with an ROI to determine kind of the price or the P within the equation. They look at the claim count within the client to get the [Q] to come up with the flat fee structure, but then it gets priced on a subscription very similar to how we sell our products to the carriers.

Question: Gary Prestopino - Barrington Research - Analyst : Okay. That's helpful. And then you may have, I think you kind of addressed this in the last question somewhat, but I just wanted to ask it anyway, I mean, in doing the due diligence on this company, it's product and all. Did you come up against that insurance companies. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 20, 2024 / 1:00PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc Announces Acquisition of EvolutionIQ Call We're hesitant to take the product just because of the EvolutionIQ on a stand-alone basis was such a small company. And, there was, concern about whether they were going to be in the market 5 to 10 years from now, and given that they're part of your system now that just goes away.

Question: Gary Prestopino - Barrington Research - Analyst : Okay. Thank you very much.

Question: Shlomo Rosenbaum - Stifel - Analyst : Hi, thank you for taking my questions. I want to jump back and, something that was touched on before, just in terms of retention with over half the firm is AI experts. I want to ask you, how far will the stock ownership go? Do you believe that there's going to be some kind of component of having to pay the people more to stay on board after you acquired the company? How much of the management team are viewed as key men, just trying to understand how to make sure that you retain the very key assets, which seem a lot of them are people assets here in terms of making this product work and continue to innovate on it?

Question: Shlomo Rosenbaum - Stifel - Analyst : Okay, thanks. And then just Githesh, you said that a lot of what you're this company competes with is just people on their own in terms of medical summarization. I know from a high level Mitchell1 also does a lot in Workman's comp and the like is, does this do they compete more with Mitchell1 in what they do?

Question: Shlomo Rosenbaum - Stifel - Analyst : Okay. Thank you.

Question: Alexei Gogolev - J.P. Morgan - Analyst : Thank you. And hello everyone, happy holidays. Githesh, I wanted to check if you've had an opportunity to look at the partnership that the EvolutionIQ has with Guidewire. And if you would be able to comment what that means for CCC, obviously, we know that you also now have a partnership with Guidewire. How will this partnership evolve following this transaction?

Question: Alexei Gogolev - J.P. Morgan - Analyst : Perfect. And the other question I had was about the comment you made that the EvolutionIQ services 7 out of top 15 players. Does it service progressive and does that mean that you are now going to service progressive?

Question: Alexei Gogolev - J.P. Morgan - Analyst : Understood. Thank you very much. Congrats with the acquisition.