CCC Intelligent Solutions Holdings Inc. (NASDAQ: CCCS) posted second-quarter revenue of $260.5 million, a 12% increase from the prior year, as several major insurance customers moved beyond pilot programs to broader deployments of the company’s AI-powered solutions.
The Chicago-based software provider for the insurance industry also reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $108.1 million, representing a 42% margin and exceeding the company’s guidance range of $99 million to $101 million.
“CCC delivered strong second quarter results, highlighted by 12% year-over-year revenue growth and adjusted EBITDA margin of 42%,” said Chairman and CEO Githesh Ramamurthy.
The quarter marked increased adoption of CCC’s newer AI-enabled products, with multiple top-tier insurers expanding their use of the company’s solutions beyond testing phases.
“In the second quarter, we began to see early evidence of more of our largest customers progressing past this pilot phase into broader rollouts of our solutions across their businesses,” Ramamurthy said during a call with the investment community discussing the second quarter results.
Several top-10 insurers contracted for multiple AI-enabled auto physical damage solutions that extend beyond photo AI-estimating to include earlier and later stages of claim handling. According to the company, the solutions have cut the time to identify total loss claims in half, resulting in millions of dollars in annual impact for customers.
“These solutions have, for example, cut the time to identify a total loss in half, resulting in millions of dollars of annual impact with the potential to improve that time and impact even further,” said Ramamurthy. “This is a win-win-win. Insurers avoid unnecessary fees, repair facilities free up bays for their repairable vehicles and consumers get faster and more satisfying claims resolution.”
CCC’s AI-based subrogation platform also gained momentum, with 25 customers now using the service, including multiple top-10 insurers. One top-20 insurer signed a long-term agreement after seeing a 6:1 return on investment driven by efficiency gains and accuracy improvements.
“Processing demand packages now literally takes minutes or hours versus days and weeks previously,” Ramamurthy explained.
Brian Herb explained during the call with investors that revenue growth in the quarter was driven by several. Approximately 5 percentage points came from cross-sell, upsell and adoption of new solutions across the client base. New customer acquisitions contributed about 3 percentage points, while the EvolutionIQ acquisition added roughly 4 percentage points.
Emerging solutions, which include diagnostics, subrogation and other AI-powered tools, contributed 2 percentage points of growth and now represent about 4% of total revenue.
Industry claim volumes declined 8% year-over-year, creating approximately a 1 percentage point headwind to growth, consistent with the first quarter impact.
“Premiums have been up 50% since March of 2020,” Ramamurthy noted in response to a question about the current weakness in claims. “We are seeing, our customers are seeing, a lot of consumers are adjusting their behavior by increasing deductibles, reducing coverage on older vehicles, avoiding filing nonessential claims to prevent hikes in premiums.”
In a follow up question on the macro indicators influencing claims volume Ramamurthy explained several factors are moderating.
“First, repair costs are starting to moderate,” said Ramamurthy. “Premium increases are also starting to moderate. And so that’s really what we’ve started to see over the last couple of quarters. And the underlying delta is really filed claims versus the underlying frequency of accidents.”
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