CCC Intelligent Solutions Holdings Inc at Goldman Sachs Communacopia & Technology Conference Transcript

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

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : So Githesh, I thought we would start with some of the more interesting comments you made on the earnings call. And you've been with CCC for multiple decades. And you said there are a couple of things that are different about this AI adoption cycle. Number one, the step-up in ROI and the technology transformation that you can see with an AI-driven solution is so dramatic. And number two, the breadth of products in the CCC portfolio is much wider than it has been in the past. So maybe let's start here. On the AI piece, tell us a little bit about some of the conversations you're having with customers? And why is this a step function change and not just a continuation of the digitalization trend that CCC has been driving for 40 years now?

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : There's two different threads here: one on what the customers are doing and then the other on what you are doing internally. So let's do the customers first. So you mentioned these conversations have been happening for two years. And then you mentioned on the last earnings call, because the conversations take time, there could be a little bit of a stalling-out effect before we see a more transformational change. So bring us up to speed, what do you think has to happen? Pick any one of your large customers that would be good adopters of the broader CCC platform. Walk us through from, maybe we're not at step one, but from step two to. How do we get them to the point where they're embracing the technology wholeheartedly so that you're actually seeing it in the numbers?

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : So on this topic of pattern recognition. So at any given time, you have customers that are closer to buying more and others that may be earlier in their life cycle. So help us think through. I think this 3Q and this 4Q is a little bit different compared to the history that you've had as a company. When do you think we get to that normal distribution or that critical mass where you're back to seeing more consistent revenue growth because you have customers that -- the adoption curve, so to speak, is moving out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 3:50PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc at Goldman Sachs Communacopia & Technology Conference Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah. I mean on these emerging solutions that we're talking about, over time, we expect them to be delivering 3 or 4 points of growth, and we've set that out in our long-term guidance range. As we're sitting here today, we're seeing more about 1 point of growth contribution coming from these emerging solutions. As Githesh said, the engagement around the emerging solutions, the number of clients that are piloting, but also the breadth of the emerging solutions -- so we're not focused on just one or two of these emerging solutions, there's a handful of them, and they've have continued to roll out. So we feel good on just the portfolio of the opportunity that we have on emergency -- for emerging solutions. We also see the engagement. So we expect it to continue to build as we think about this year being one point of contribution, a glide path being more like 3 to 4 points over time. It will continue to ramp and get towards the long-term growth rate.

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : Absolutely. And I think that's particularly relevant to Estimate STP. So maybe we can talk a little bit about the success that you've had to date. But more importantly, I've always gotten the sense that this is phase one of what's going to be a broader vision that you have for the industry. So share with us a little bit about how Estimate STP, how the road map there progresses over the next couple of years?

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : And remind us, Brian -- Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah, I was just going to say, Estimate STP was kind of the flagship launch. So that was back in the second half of '21, it was using AI, computer vision AI for -- to detect the damage and help policy -- carriers who would send it out to policyholders. Policyholders would use this through their mobile device, be able to take photos of it, computer AI, would then write a line item estimate that gives a specific repairable estimate for both the policyholder and the carrier. And so that was kind of the initial launch of AI that we brought in in driving real revenue. Today, about 3% of our claims run through Estimate STP. But over time, we expect significantly more to go through, and so we're really excited about it.

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : And just to clarify, with the right CCC product, that decision could have been made earlier before --

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : And maybe just remind us, there's a consistent theme here on the breadth of the portfolio, the cadence of product releases having gone up, micro services architecture. What has changed over the last three to five years that has leveled you up to a higher R&D cadence or higher product innovation cadence?

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : We spent the first half of this conversation on the product side. Commensurate with the product side, you also have to have breadth in the sales force. And more specifically, the training and enablement that allows them to sell the array of emerging products. So talk to us about how you're up-leveling your salespeople. And for us from the outside when we look at the website and we see the 40-plus different products that you have, it's a lot of products. So how do you gear up your sales force to a path of lease resistance to be able to sell the expanded portfolio? Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah. I mean we have a sales organization that's set up against our end customer group. So we have a direct sales organization that supports the carriers. We have a direct sales organization that supports the repair facilities; we have 30,000 repair facility clients. We have a sales organization that supports our parts. So we've had that we continue to support that team. But the thing that we've done more recently is we've launched product sellers across as a bit of a horizontal supporting them. So areas like subrogation, areas like casualty, that are technical sales, we're bringing in specialists that work across the account teams to make sure that we're setting those solutions up for the customer needs. And so this product specialty that we've recently launched and invested in is really helping especially move into these newer solutions that are more technical than some of the historical solutions. That really allows our sales organization to bring this broad portfolio into their client and not necessarily needed to be an expert on every single end solution that we have, to your point on the volume of solutions, making sure that we both have kind of the vertical support but also the horizontal product support across the sales organization.

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : I want to stay on the topic of casualty for a few minutes. So one of the amazing things about your market segment is how sticky it is. It's very difficult for a competitor to displace CCC in property. The inverse could be true arguably in casualty, where you have incumbents in the casualty side of REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 3:50PM, CCCS.OQ - CCC Intelligent Solutions Holdings Inc at Goldman Sachs Communacopia & Technology Conference the business that have been there for decades as well. So talk to us about how you initiate those conversations, how you drive success in casualty and perhaps what the limiting factor is to you being able to take more share in that half of the business?

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst :

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : Absolutely. I want to spend a couple of minutes on payments as well. So I think there's been a number of success stories in the vertical software with payments. There's also been a number of failures. In any case, the pace of adoption tends to be a little bit like pulling teeth. So talk to us about your learning curve on payments. How is it going? Is there anything that stands out to you as, okay, we need to do this thing differently to be able to level up the level of adoption?

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : Absolutely. Let me pause for a moment. Questions from the audience? Unidentified Participant (inaudible - microphone inaccessible) Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Well, yeah, I mean, when you look at what we've recently launched, it could be Payroll. It could be our Diagnostics workflow solution. It could be Amplify, which is helping our shops build their web website. We have CRM tools. Each of these are each of these SKUs can be a couple of hundred dollars a month. And as an opportunity, you then just put that against the 30,000 shop clients and then an adoption curve on it. So it's a very large market on from your overall 30,000. The number of -- the breadth of the portfolio we're bringing out to the shops continues to increase. It's not necessarily about one individual like Payroll per se; it's really around how do we just help them drive digitization across their operations. And so we really think about that as kind of this broader bundle of cross-sell and upsell opportunities. And we're seeing early days, good adoption on these, but also gives us conviction on additional solutions that we can bring into market really to help SMBs just run their business versus historically been much more focused on helping them with the repair of the car. We've now started to move into the back office and helping them just run their operations.

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : I want to end connecting the product in this go-to-market side one more time, and it's a little bit of a question on pricing and margins. So as you think about the pace of innovation, I would argue that your risk of competition and your barrier to entry goes down and up prospectively. So your risk of competition goes down, your barrier to entry goes up. And I know how closely you work with your customers to figure out the right pricing model and to make sure that you're delivering value for the pricing that you ask for. So put all of this together, how do you think about bundling and offering incentives for customers to adopt? And how do you think about the appropriate place to drive margins over the long term, given how differentiated your data set is and some of the work you're doing on the innovation side? Brian Herb - CCC Intelligent Solutions Holdings Inc - Executive Vice President, Chief Financial and Administrative Officer Yeah. Do you want to take the price? I can take the margin?

Question: Gabriela Borges - Goldman Sachs & Company, Inc. - Analyst : Excellent. Please join me in thanking Brian and Githesh for their time. Thank you.