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 ~~September~~June 30, ~~2022~~2023


☐	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~~Nasdaq Stock ~~Exchange~~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	☐
~~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 ~~October~~July 28, ~~2022,~~2023, ~~620,711,455~~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 ~~September~~June 30, ~~2022~~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 ~~September~~June 30, ~~2022~~2023 (unaudited) and December 31, ~~2021~~2022	5
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income ~~(Loss)~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	6
	Unaudited Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	7
	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3028
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4644
Item 4.	Controls and Procedures	4644

PART II. OTHER INFORMATION



Item 1.	Legal Proceedings	4745
Item 1A.	Risk Factors	4745
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	4745
Item 3.	Defaults Upon Senior Securities	4745
Item 4.	Mine Safety Disclosures	4745
Item 5.	Other Information	4745
Item 6.	Exhibits	4745

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;

•

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 and products;~~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;

•

~~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 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 ~~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~~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

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.

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

September 30,

December 31,

2022

2021

(Unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

248,153

182,544

Accounts receivable—Net of allowances of $4,690 and $3,791 as of September 30, 2022 and
   December 31, 2021, respectively

98,194

78,793

Income taxes receivable

71

318

Deferred contract costs

15,788

15,069

Other current assets

33,898

46,181

Total current assets

396,104

322,905

SOFTWARE, EQUIPMENT, AND PROPERTY—Net

147,531

135,845

OPERATING LEASE ASSETS

34,901

37,234

INTANGIBLE ASSETS—Net

1,143,630

1,213,249

GOODWILL

1,494,267

1,466,884

DEFERRED FINANCING FEES, REVOLVER—Net

2,439

2,899

DEFERRED CONTRACT COSTS

18,818

22,117

EQUITY METHOD INVESTMENT

10,228

10,228

OTHER ASSETS

49,999

26,165

TOTAL

3,297,917

3,237,526

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

14,579

12,918

Accrued expenses

63,873

66,691

Income taxes payable

17,025

7,243

Current portion of long-term debt

8,000

8,000

Current portion of long-term licensing agreement—Net

2,832

2,703

Operating lease liabilities

3,713

8,052

Deferred revenues

33,602

31,042

Total current liabilities

143,624

136,649

LONG-TERM DEBT—Net

775,770

780,610

DEFERRED INCOME TAXES—Net

222,370

275,745

LONG-TERM LICENSING AGREEMENT—Net

31,488

33,629

OPERATING LEASE LIABILITIES

58,111

56,133

WARRANT LIABILITIES

39,026

62,478

OTHER LIABILITIES

2,729

5,785

Total liabilities

1,273,118

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; 620,117,025 and
   609,768,296 shares issued and outstanding at September 30, 2022 and December 31,
   2021, respectively

62

61

Additional paid-in capital

2,720,695

2,618,924

Accumulated deficit

(709,018
)

(746,352
)
Accumulated other comprehensive loss

(1,119
)

(315
)
Total stockholders’ equity

2,010,620

1,872,318

TOTAL

3,297,917

3,237,526

See notes to condensed consolidated financial statements.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

(In thousands, except share and per share data)

(Unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

REVENUES

$
198,734

$
176,628

$
578,342

$
501,205

COST OF REVENUES

Cost of revenues, exclusive of amortization of acquired technologies

46,379

51,273

135,174

128,218

Amortization of acquired technologies

6,748

6,580

20,193

19,740

Total cost of revenues

53,127

57,853

155,367

147,958

GROSS PROFIT

145,607

118,775

422,975

353,247

OPERATING EXPENSES:

Research and development

40,273

67,016

114,711

128,894

Selling and marketing

30,838

80,382

88,731

121,350

General and administrative

39,376

142,511

123,093

208,745

Amortization of intangible assets

18,066

18,078

54,212

54,232

Total operating expenses

128,553

307,987

380,747

513,221

OPERATING INCOME (LOSS)

17,054

(189,212
)

42,228

(159,974
)
INTEREST EXPENSE

(10,501
)

(13,878
)

(25,786
)

(51,548
)
CHANGE IN FAIR VALUE OF DERIVATIVE INSTRUMENTS

5,991

2,007

5,991

8,373

CHANGE IN FAIR VALUE OF WARRANT LIABILITIES

312

(26,889
)

23,452

(26,889
)
GAIN ON SALE OF COST METHOD INVESTMENT

9

—

3,587

—

LOSS ON EARLY EXTINGUISHMENT OF DEBT

—

(15,240
)

—

(15,240
)
OTHER INCOME (LOSS)—Net

382

(93
)

576

1

PRETAX INCOME (LOSS)

13,247

(243,305
)

50,048

(245,277
)
INCOME TAX (PROVISION) BENEFIT

(3,452
)

53,523

(12,714
)

54,227

NET INCOME (LOSS) INCLUDING NON-CONTROLLING
   INTEREST

9,795

(189,782
)

37,334

(191,050
)
Less: net income (loss) attributable to non-controlling interest

—

—

—

—

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

$
9,795

$
(189,782
)

$
37,334

$
(191,050
)
Net income (loss) per share attributable to common stockholders:

Basic

$
0.02

$
(0.34
)

$
0.06

$
(0.36
)
Diluted

$
0.02

$
(0.34
)

$
0.06

$
(0.36
)
Weighted-average shares used in computing net income (loss) per share
   attributable to common stockholders:

Basic

609,421,073

566,454,782

606,181,316

525,877,533

Diluted

643,582,922

566,454,782

642,208,622

525,877,533

COMPREHENSIVE INCOME (LOSS):

Net income (loss) including non-controlling interest

9,795

(189,782
)

37,334

(191,050
)
Other comprehensive income (loss)—Foreign currency translation
   adjustment

(510
)

11

(804
)

(18
)
COMPREHENSIVE INCOME (LOSS) INCLUDING
   NON-CONTROLLING INTEREST

9,285

(189,771
)

36,530

(191,068
)
Less: comprehensive income (loss) attributable to non-controlling
   interest

—

—

—

—

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

$
9,285

$
(189,771
)

$
36,530

$
(191,068
)


	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.

CCC INTELLIGENT SOLUTIONS HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(In thousands, except number of shares)

(Unaudited)


	Redeemable																						Redeemable
	Non-Controlling																Accumulated						Non-Controlling		Preferred Stock—Issued and Outstanding				Common Stock—Issued and Outstanding										Accumulated
	Interest		Preferred Stock—Issued and Outstanding				Common Stock—Issued and Outstanding				Additional						Other			Total			Interest										Additional						Other			Total
			Number of		Par		Number of		Par		Paid-In			Accumulated			Comprehensive			Stockholders’					Number of		Par		Number of		Par		Paid-In			Accumulated			Comprehensive			Stockholders’
			Shares		Value		Shares		Value		Capital			Deficit			Loss			Equity					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
BALANCE—December 31, 2022																							$	14,179		—	$	—		622,072,905	$	62	$	2,754,055		$	(707,946	)	$	(884	)	$	2,045,287
Stock-based compensation expense		—		—		—		—		—		23,644			—			—			23,644			—		—		—		—		—		28,930			—			—			28,930
Exercise of stock options—net of tax		—		—		—		3,961,270		—		10,633			—			—			10,633
Exercise of warrants—net		—		—		—		1,246		—		—			—			—			—
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		—		—		—		27,314		—		—			—			—			—			—		—		—		2,217,379		—		(11,449	)		—			—			(11,449	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			9			9			—		—		—		—		—		—			—			34			34
Net income		—		—		—		—		—		—			11,975			—			11,975			—		—		—		—		—		—			2,184			—			2,184
BALANCE—March 31, 2022		14,179		—		—		613,758,126		61		2,653,201			(734,377	)		(306	)		1,918,579
BALANCE—March 31, 2023																								14,179		—		—		627,683,715		63		2,781,104			(705,762	)		(850	)		2,074,555
Stock-based compensation expense		—		—		—		—		—		28,403			—			—			28,403			—		—		—		—		—		35,900			—			—			35,900
Exercise of stock options—net of tax		—		—		—		1,713,991		1		4,722			—			—			4,723			—		—		—		3,996,713		—		12,585			—			—			12,585
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		29,834		—		—			—			—			—			—		—		—		302,063		—		(90	)		—			—			(90	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			(303	)		(303	)		—		—		—		—		—		—			—			(285	)		(285	)
Net income		—		—		—		—		—		—			15,564			—			15,564
BALANCE—June 30, 2022		14,179		—		—		615,501,951		62		2,686,326			(718,813	)		(609	)		1,966,966
Stock-based compensation expense		—		—		—		—		—		28,722			—			—			28,722
Exercise of stock options—net of tax		—		—		—		2,685,029		—		7,455			—			—			7,455
Issuance of common stock under employee stock purchase plan		—		—		—		408,879		—		3,197			—			—			3,197
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		1,521,166		—		(5,005	)		—			—			(5,005	)
Foreign currency translation adjustment		—		—		—		—		—		—			—			(510	)		(510	)
Net income		—		—		—		—		—		—			9,795			—			9,795
BALANCE—September 30, 2022	$	14,179		—	$	—		620,117,025	$	62	$	2,720,695		$	(709,018	)	$	(1,119	)	$	2,010,620
Accretion of redeemable non-controlling interest																								315		—		—				—		(315	)		—			—			(315	)
Net loss																								—		—		—		—		—		—			(97,344	)		—			(97,344	)
BALANCE—June 30, 2023																							$	14,494		—	$	—		631,982,491	$	63	$	2,829,184		$	(803,106	)	$	(1,135	)	$	2,025,006

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

Accumulated

Interest

Preferred Stock—Issued and Outstanding

Common Stock—Issued and Outstanding

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

  Stock-based compensation expense

—

—

—

—

—

2,579

—

—

2,579

  Foreign currency translation
   adjustment

—

—

—

—

—

—

—

(36
)

(36
)
  Net income

—

—

—

—

—

—

3,816

—

3,816

BALANCE—June 30, 2021

14,179

—

—

505,430,378

50

1,517,074

(265,189
)

(300
)

1,251,635

  Stock-based compensation expense

—

—

—

—

—

213,966

—

213,966

  Net equity infusion from the Business
   Combination

—

—

—

97,740,002

10

704,831

—

—

704,841

  Dividend to CCCIS stockholders

—

—

—

—

—

—

(134,627
)

—

(134,627
)
  Deemed distribution to CCCIS option
   holders

—

—

—

—

—

(9,006
)

—

—

(9,006
)
  Company Vesting Shares granted to
    CCCIS stockholders

—

—

—

—

—

98,885

(98,885
)

—

—

  Foreign currency translation
   adjustment

—

—

—

—

—

—

—

11

11

  Net loss

—

—

—

—

—

—

(189,782
)

—

(189,782
)
BALANCE—September 30, 2021

$
14,179

—

$
—

603,170,380

$
60

$
2,525,750

$
(688,483
)

$
(289
)

$
1,837,038


	Redeemable		Preferred Stock—Issued and Outstanding				Common Stock—Issued and Outstanding
	Non-Controlling															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, 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
Stock-based compensation expense		—		—		—		—		—		28,403		—			—			28,403
Exercise of stock options - Net of tax		—		—		—		1,713,991		1		4,722		—			—			4,723
Issuance of common stock upon vesting of RSUs—net of tax		—		—		—		29,834		—		—		—			—			—
Foreign currency translation adjustment		—		—		—		—		—		—		—			(303	)		(303	)
Net income		—		—		—		—		—		—		15,564			—			15,564
BALANCE—June 30, 2022	$	14,179		—	$	—		615,501,951	$	62	$	2,686,326	$	(718,813	)	$	(609	)	$	1,966,966

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 Nine Months Ended

September 30,

2022

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$
37,334

$
(191,050
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization of software, equipment, and property

20,155

18,161

Amortization of intangible assets

74,405

73,972

Deferred income taxes

(53,061
)

(66,499
)
Stock-based compensation

80,769

235,413

Amortization of deferred financing fees

1,424

3,204

Amortization of discount on debt

196

537

Change in fair value of derivative instruments

(5,991
)

(8,373
)
Change in fair value of warrant liabilities

(23,452
)

26,889

Loss on early extinguishment of debt

—

15,240

Non-cash lease expense

3,076

5,029

Loss on disposal of software, equipment and property

795

—

Gain on sale of cost method investment

(3,587
)

—

Other

101

54

Changes in:

Accounts receivable—Net

(19,532
)

(8,332
)
Deferred contract costs

(719
)

(1,916
)
Other current assets

12,321

(4,673
)
Deferred contract costs—Non-current

3,299

(4,504
)
Other assets

(18,227
)

(3,221
)
Operating lease assets

1,623

5,133

Income taxes

10,029

(2,846
)
Accounts payable

2,466

1,399

Accrued expenses

(2,664
)

17,051

Operating lease liabilities

(4,687
)

(5,935
)
Deferred revenues

2,557

2,861

Extinguishment of interest rate swap liability

—

(9,987
)
Other liabilities

(192
)

(882
)
Net cash provided by operating activities

118,438

96,725

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of software, equipment, and property

(38,844
)

(25,022
)
Acquisition of Safekeep, Inc., net of cash acquired

(32,242
)

Purchase of equity method investment

—

(10,228
)
Proceeds from sale of cost method investment

3,901

Purchase of intangible asset

—

(49
)
Net cash used in investing activities

(67,185
)

(35,299
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options

22,814

503

Proceeds from employee stock purchase plan

3,197

—

Payments for employee taxes withheld upon vesting of equity awards

(5,005
)

—

Principal payments on long-term debt

(6,000
)

(1,336,154
)
Deemed distribution to CCCIS option holders

—

(9,006
)
Net proceeds from equity infusion from the Business Combination

—

763,300

Proceeds from issuance of long-term debt, net of fees paid to lender

—

789,927

Proceeds from issuance of common stock

—

1,007

Payment of fees associated with early extinguishment of long-term debt

—

(3,320
)
Dividends to CCCIS stockholders

—

(269,174
)
Net cash provided by (used in) financing activities

15,006

(62,917
)
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(650
)

(162
)
NET CHANGE IN CASH AND CASH EQUIVALENTS

65,609

(1,653
)
CASH AND CASH EQUIVALENTS:

Beginning of period

182,544

162,118

End of period

$
248,153

$
160,465

NONCASH INVESTING AND FINANCING ACTIVITIES:

Noncash purchases of software, equipment, and property

$
—

$
4,054

Leasehold improvements acquired by tenant improvement allowance

$
—

$
10,556

Contingent consideration related to business acquisition

$
200

$
—

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest

$
24,150

$
47,312

Cash paid for income taxes—Net

$
55,526

$
15,119


	For the Six Months Ended
	June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(95,160	)	$	27,539
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of software, equipment, and property		17,966			13,490
Amortization of intangible assets		49,419			49,591
Impairment of goodwill and intangible assets		82,742			—
Deferred income taxes		(23,791	)		(43,703	)
Stock-based compensation		64,720			52,047
Amortization of deferred financing fees		851			949
Amortization of discount on debt		111			131
Change in fair value of derivative instruments		(1,009	)		—
Change in fair value of warrant liabilities		19,180			(23,140	)
Non-cash lease expense		1,232			2,152
Loss on disposal of software, equipment and property		—			795
Gain on sale of cost method investment		—			(3,578	)
Other		115			47
Changes in:
Accounts receivable—Net		2,322			(4,027	)
Deferred contract costs		(315	)		(952	)
Other current assets		7,116			15,463
Deferred contract costs—Non-current		681			2,248
Other assets		(5,267	)		(9,935	)
Operating lease assets		(5	)		1,576
Income taxes		772			13,851
Accounts payable		(8,534	)		3,204
Accrued expenses		(14,975	)		(7,949	)
Operating lease liabilities		(249	)		(4,308	)
Deferred revenues		4,825			2,256
Other liabilities		(115	)		(62	)
Net cash provided by operating activities		102,632			87,685
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of software, equipment, and property		(29,084	)		(25,469	)
Acquisition of Safekeep, Inc., net of cash acquired		—			(32,242	)
Proceeds from sale of cost method investment		—			3,892
Net cash used in investing activities		(29,084	)		(53,819	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		20,827			15,511
Proceeds from employee stock purchase plan		1,326			—
Payments for employee taxes withheld upon vesting of equity awards		(11,539	)		—
Principal payments on long-term debt		(4,000	)		(4,000	)
Net cash provided by financing activities		6,614			11,511
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(373	)		(281	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		79,789			45,096
CASH AND CASH EQUIVALENTS:
Beginning of period		323,788			182,544
End of period	$	403,577		$	227,640
NONCASH INVESTING AND FINANCING ACTIVITIES:
Noncash purchases of software, equipment, and property	$	550		$	—
Contingent consideration related to business acquisition	$	—		$	200
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	26,946		$	14,153
Cash paid for income taxes—Net	$	19,954		$	38,946

See notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ORGANIZATION AND nature of operations

CCC Intelligent Solutions Holdings Inc. (the "Company"), a Delaware corporation, is a leading provider of innovative cloud, mobile, telematics, hyperscale technologies, and applications for the property and casualty (“P&C”) insurance economy. Our cloud-based software as a service (“SaaS”) platform connects trading partners, facilitates commerce, and supports mission-critical, artificial intelligence ("AI") enabled digital workflows. Our platform digitizes workflows and connects companies across the P&C insurance economy, including insurance carriers, collision repairers, parts suppliers, automotive manufacturers, financial institutions, and others.

The Company is headquartered in Chicago, Illinois. The Company’s primary operations are in the United States (“~~US”~~U.S.”) and it also has operations in China.

The Company was originally incorporated as a Cayman Islands exempted company on July 3, 2020 as a special purpose acquisition company under the name Dragoneer Growth Opportunities Corp. ("Dragoneer"). On February 2, 2021, ~~CCCIS~~Cypress Holdings Inc. ("CCCIS"), a Delaware corporation, entered into ~~the~~a Business Combination Agreement (the "Business Combination Agreement") with Dragoneer. In connection with the closing (the "Closing") of the transactions contemplated by the Business Combination ~~(see Note 3)~~Agreement (the "Business Combination"), Dragoneer changed its jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a Delaware corporation on July 30, 2021, upon which Dragoneer changed its name to CCC Intelligent Solutions Holdings Inc.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation—The condensed consolidated balance sheets as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the condensed consolidated statements of operations and comprehensive (loss) income ~~(loss)~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the condensed consolidated statements of mezzanine equity and stockholders’ equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, and the condensed consolidated statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operations and cash flows have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or any future period.

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (“SEC”). The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, the condensed consolidated financial statements may not include all the information and footnotes necessary for a complete presentation of financial position, results of operations or cash flows. These condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

The Company's significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. There have been no material changes to the significant accounting policies since December 31, ~~2021.~~2022.

Basis of Accounting—The accompanying condensed consolidated financial statements are prepared in accordance with GAAP and include the accounts of the Company and its wholly-owned subsidiaries and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements include 100% of the accounts of wholly-owned and majority-owned subsidiaries and the ownership interest of the minority investor is recorded as a non-controlling interest in a subsidiary.

Use of Estimates—The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts, and the disclosures of contingent amounts in the Company’s condensed consolidated financial statements and the accompanying notes. Although the Company regularly assesses these estimates, actual

results could differ from those estimates. Changes in estimates are recorded in the period in which they become known. The

Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from management’s estimates if past experience or other assumptions are not substantially accurate. Significant estimates in these condensed consolidated financial statements include the estimation of contract transaction prices, the determination of the amortization period for contract assets, the valuation of goodwill and intangible assets, the valuation of the warrant liabilities, the estimates and assumptions associated with stock incentive plans, and the measurement of expected contingent consideration in connection with business acquisitions.

~~Business Combinations~~Redeemable Non-Controlling Interest—The Company ~~allocates the purchase consideration of acquired companies to tangible and intangible assets acquired and liabilities assumed based~~presents a redeemable non-controlling interest as mezzanine equity within its condensed consolidated balance sheets when it is redeemable at a fixed or determinable price on ~~their estimated fair values~~a fixed or determinable date at the ~~acquisition date, with~~option of the ~~excess recorded to goodwill. These estimates are inherently uncertain and subject to refinement. During~~holder or upon the ~~measurement period, which may be up to one year from~~occurrence of an event that is not solely within the ~~acquisition date, adjustments may be recorded to~~control of the Company.

The redeemable non-controlling interest was initially measured at fair value on the date of ~~these tangible and intangible assets acquired and liabilities assumed, including uncertain tax positions and tax-related valuation allowances, with~~issuance. When the ~~corresponding offset to goodwill. Upon~~redemption of a mezzanine-classified non-controlling interest becomes probable, the ~~conclusion~~carrying amount of the ~~measurement period or final determination of~~redeemable non-controlling interest is increased by periodic accretions using the ~~fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent~~interest method so that the carrying amount will equal the redemption amount on the date that the shares become redeemable. These adjustments are recorded as accretion of redeemable non-controlling interest, with an offset to additional paid-in capital, on the condensed consolidated statements of ~~operations~~mezzanine equity and ~~comprehensive income (loss).~~stockholders' equity.

~~The Company estimates the fair value of contingent consideration related~~Any such charges to ~~business combinations on the date of acquisition (see Note 4). The fair value~~additional paid-in capital affect net (loss) income available to CCC common stockholders as part of the ~~contingent consideration is remeasured each reporting period, with any change in the fair value recorded within the condensed consolidated statements~~Company's calculation of ~~operations and comprehensive~~net (loss) income ~~(loss).~~

~~Recently Adopted Accounting Pronouncements—Effective January 1, 2022, the Company adopted Accounting Standards Update ("ASU") 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU is intended~~per share attributable to reduce the complexity of accounting for income taxes. Changes include treatment of hybrid tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of legal entities not subject to tax, intra period tax allocation, ownership changes in investments, interim-period accounting for enacted changes in tax law, and year-to-date loss limitation in interim-period tax accounting. The adoption of ASU 2019-12 did not have a material impact on the Company's condensed consolidated financial statements.common stockholders.

Recently Issued Accounting Pronouncements—In ~~June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments~~, and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2020-03. This new guidance replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The Company plans to adopt ASU 2016-13 on January 1, 2023 and does not expect its adoption to have a material impact on its condensed consolidated financial statements.

In March 2020, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and in January 2021 subsequently issued ASU 2021-01, which refines the scope of Topic 848. These ASUs provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions, subject to meeting certain criteria, that reference the London Interbank Offered Rate ("LIBOR"), or another rate that is expected to be discontinued. ASU 2020-04 was effective upon ~~issuance and can generally be applied through~~issuance. In December 2022, the FASB issued ASU 2022-06 that defers the sunset date for applying the reference rate reform relief in Accounting Standards Codification ("ASC") 848 to December 31, ~~2022. While there has been no material effect to our condensed consolidated financial statements,~~2024. The Company adopted these standards during the ~~guidance will potentially be applicable when we modify~~three months ended June 30, 2023 and transitioned the ~~current~~ reference rate ~~of LIBOR to another reference rate in our First Lien Credit Agreement~~within its credit agreement and related interest rate cap agreements from LIBOR to the Secured Overnight Financing Rate ("SOFR") (see Note ~~15)~~14). The adoption of these standards did not have a material impact on the condensed consolidated financial statements.

~~BUSINESS COMBINATION~~

On July 30, 2021, the Company consummated the Business Combination pursuant to the terms of the Business Combination Agreement, dated as of February 2, 2021, as amended, by and among Dragoneer, Chariot Opportunity Merger Sub, Inc. (“Chariot Merger Sub”), a Delaware corporation, and CCCIS, a Delaware corporation.

Immediately upon the consummation of the Business Combination and the Transactions, Chariot Merger Sub, a wholly-owned direct subsidiary of Dragoneer, merged with and into CCCIS, with CCCIS surviving the Business Combination as a wholly-owned direct subsidiary of Dragoneer (“Merger”). In connection with the Transactions, Dragoneer changed its name to “CCC Intelligent Solutions Holdings Inc.”

The Merger was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Dragoneer was treated as the acquired company for accounting purposes and the Business Combination was treated as the equivalent of CCCIS issuing stock for the net assets of Dragoneer, accompanied by a recapitalization.

The net assets of Dragoneer are stated at historical cost, with no goodwill or other intangible assets recorded. Reported shares and earnings per share available to holders of CCCIS’s capital stock and equity awards prior to the Business Combination have been retroactively restated reflecting the exchange ratio of ~~1:340.5507~~ ~~("Exchange Ratio").~~

~~Pursuant to the Merger, at the Effective Time of the Merger (the “Effective Time”):~~

•

each share of CCCIS common stock that was issued and outstanding immediately prior to the Effective Time was automatically canceled and converted into the right to receive shares of the Company’s common stock based on the Exchange Ratio, rounded down to the nearest whole number of shares;

•

each option to purchase shares of CCCIS common stock, whether vested or unvested, that was outstanding and unexercised as of immediately prior to the Effective Time was assumed by the Company and became an option (vested or unvested, as applicable) to purchase a number of shares of the Company’s common stock equal to the number of shares of CCCIS common stock subject to such option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares, at an exercise price equal to the exercise price per share of such option immediately prior to the Effective Time divided by the Exchange Ratio and rounded up to the nearest whole cent;

•

each of Dragoneer’s redeemable Class A ordinary shares and Class B ordinary shares that were issued and outstanding immediately prior to the Effective Time was exchanged for an equal number of shares of the Company’s common stock.

Concurrently with the execution of the Business Combination Agreement, the Company entered into subscription agreements with certain institutional investors (the “PIPE Investors”), pursuant to which the PIPE Investors purchased, immediately prior to the Closing, an aggregate of ~~15,000,000~~ ~~shares of the Company’s common stock at a purchase price of $10.00~~ ~~per share.~~

~~Prior to the Closing, the Company entered into forward purchase agreements with Dragoneer Funding LLC and Willett Advisors LLC, pursuant to which the Company issued an aggregate of~~ ~~17,500,000~~ ~~forward purchase units, each consisting of one common share and one-fifth of one Public Warrant to purchase one common share for $11.50~~ ~~per share, for a purchase price of $10.00~~ ~~per unit. The public warrants were redeemed in December 2021 (see Note 18).~~

~~Effective upon Closing,~~ ~~8,625,000~~ shares issued and held by Dragoneer Growth Opportunities Holdings (the “Sponsor Vesting Shares”) became non-transferable and subject to forfeiture on the tenth anniversary of Closing if neither of the following triggering events has occurred: (a) the share price of the Company’s common stock has been greater than or equal to $~~13.00~~ ~~per share for any~~ ~~twenty~~ ~~trading days within any~~ ~~thirty~~ consecutive trading day period beginning after Closing, or (b) a change in control as defined in the Business Combination Agreement. The Sponsor Vesting Shares do not meet the criteria to be classified as a liability and are presented within stockholders’ equity.

~~As part of the Business Combination,~~ ~~15.0~~ million shares of the Company’s common stock (the “Company Earnout Shares”) shall be issued to CCCIS shareholders existing as of immediately prior to Closing and holders of vested and unvested equity awards of CCCIS as of the date of the Business Combination Agreement (subject to continued employment), following a triggering event (“CCC Triggering Event”). A CCC Triggering Event is defined as the earlier of (a) the first date on which the shares of the Company’s common stock have traded for greater than or equal to $~~15.00~~ ~~per share for any~~ ~~twenty~~ ~~trading days within any~~ ~~thirty~~ consecutive trading day period commencing after the closing or (b) a change in control as defined in the Business Combination Agreement. If a CCC Triggering Event does not occur within ten years after Closing, the CCC Earnout Shares will be forfeited.

~~Of the 15.0 million Company Earnout Shares,~~ ~~13.5~~ million shares are reserved for issuance to CCCIS shareholders. The Company Earnout Shares do not meet the criteria to be classified as a liability and the fair value of the shares reserved for shareholders of $~~98.9~~ ~~million was charged to additional paid-in capital during the three months ended September 30, 2021. The remaining~~ ~~1.5~~ ~~million Company Earnout Shares are reserved for issuance to CCCIS option holders.~~

The Company Earnout Shares are not issued shares and are excluded from the Company's issued and outstanding shares within its condensed consolidated statements of mezzanine equity and stockholders' equity.

~~In connection with the Business Combination, the Company incurred underwriting fees and other costs considered direct and incremental to the transaction totaling $11.1~~ million (before tax), consisting of legal, accounting, financial advisory and other professional fees. These amounts were treated as a reduction of the cash proceeds and are deducted from the Company’s additional paid-in capital.

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows for the nine months ended September 30, 2021 and the consolidated statement of mezzanine equity and stockholders’ equity for the three and nine months ended September 30, 2021 (in thousands):

Cash - Dragoneer trust and cash

$
449,441

Cash - PIPE Financing

150,000

Cash - Forward Purchase Agreements

175,000

Less: transaction costs and advisory fees

(11,141
)
Net cash contributions from Business Combination

763,300

Less: non-cash fair value of Public Warrants and Private Warrants

(58,459
)
Net equity infusion from Business Combination

$
704,841

BUSINESS ACQUISITION

On February 8, 2022, the Company completed its acquisition of Safekeep, Inc. (“Safekeep”), a privately held company that leverages AI to streamline and improve subrogation management across auto, property, workers’ compensation and other insurance lines of business. Leveraging Safekeep’s AI-enabled subrogation solutions, the acquisition ~~will broaden~~broadens the Company’s portfolio of cloud-based solutions available to its insurance customers.

In exchange for all the outstanding shares of Safekeep, the Company paid total cash consideration of $32.3 million upon closing. In accordance with the acquisition agreement, the Company placed $6.0 million in escrow for a general indemnity holdback to be paid to the sellers within 15 months of closing subject to reduction for certain indemnifications and other potential obligations of the selling shareholders. The remaining cash held in escrow was paid to the sellers in May 2023.

As additional consideration for the shares, the acquisition agreement includes a contingent earnout for additional cash consideration. The potential amount of the earnout is calculated as a multiple of revenue, above a defined floor, during the 12-month measurement period ending December 31, 2024 and is not to exceed $90.0 million. The fair value of the contingent consideration as of the acquisition date of $0.2 million was estimated using a Monte Carlo simulation model that relies on unobservable inputs, including management estimates and assumptions. Thus, the contingent earnout is a Level 3 measurement.

The acquisition date fair value of the consideration transferred was $32.5 million, which consisted of the following (in thousands):


Cash paid through closing	$	32,300
Fair value of contingent earnout consideration		200
Total acquisition date fair value of the consideration transferred	$	32,500

The acquisition was accounted for as a business combination and reflects the application of acquisition accounting in accordance with ~~Accounting Standards Codification ("ASC")~~ASC Topic 805, Business Combinations. The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their fair values as of the acquisition date with the excess purchase price assigned to goodwill.

The goodwill was primarily attributable to the expected synergies from the combined service offerings and the value of the acquired workforce. The goodwill is not deductible for tax purposes.

The Company’s estimates of the fair values of the assets acquired, liabilities assumed and contingent consideration ~~are~~were based on information that was available at the date of the ~~acquisition and the Company is continuing to evaluate the underlying inputs and assumptions used in its valuations. Accordingly, these preliminary estimates are subject to change during~~acquisition. During the measurement period, which ismay be up to one year from the acquisition date, adjustments may be recorded to the fair value of ~~acquisition.~~these tangible and intangible assets acquired and liabilities assumed, including uncertain tax positions and tax-related valuation allowances, with the corresponding offset to goodwill. In December 2022, the Company recorded a measurement period adjustment to reflect the facts and circumstances in existence at the acquisition date. The adjustment related to the valuation of the deferred tax liabilities for $0.9 million, with a corresponding increase in goodwill. There ~~have been~~were no ~~material~~other significant changes to the preliminary purchase price allocation. The purchase price allocation of estimated fair values was finalized as of December 31, 2022.

The following table summarizes the final allocation of the consideration to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):

Assets acquired:

Current assets

$
150

Intangible asset - acquired technology

4,800

Deferred tax assets

314

Total assets acquired

5,264

Liabilities assumed:

Current liabilities

147

Total liabilities assumed

147

Net assets acquired

5,117

Goodwill

27,383

Total purchase price

$
32,500


Assets acquired:
Current assets	$	150
Intangible asset - acquired technology		4,800
Total assets acquired		4,950
Liabilities assumed:
Current liabilities		147
Deferred tax liabilities		548
Total liabilities assumed		695
Net assets acquired		4,255
Goodwill		28,245
Total purchase price	$	32,500

The acquired technology intangible asset has an estimated useful life of seven years and is being amortized on a straight-line basis.

The fair value of the acquired technology intangible asset was determined by a valuation model based on estimates of future operating projections as well as judgments on the discount rate and other variables. This fair value measurement is based on significant unobservable inputs, including management estimates and assumptions and thus represents a Level 3 measurement.

~~The~~During the six months ended June 30, 2022, the Company incurred $1.2 million of transaction costs associated with the ~~acquisition were $1.2~~ ~~million and~~acquisition. The transaction costs are included in general and administrative expenses within the accompanying condensed consolidated ~~statements~~statement of operations and comprehensive ~~income~~ (loss) ~~for the nine months ended September 30, 2022.~~income.

5.4.

REvenue

Disaggregation of Revenue—The Company provides disaggregation of revenue based on type of service as it believes these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The following table summarizes revenue by type of service for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Software subscriptions

$
191,154

$
169,958

$
556,470

$
481,822

Other

7,580

6,670

21,872

19,383

Total revenues

$
198,734

$
176,628

$
578,342

$
501,205


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Software subscriptions	$	202,851	$	185,499	$	399,108	$	365,317
Other		8,859		7,287		17,522		14,292
Total revenues	$	211,710	$	192,786	$	416,630	$	379,609

Transaction Price Allocated to the Remaining Performance Obligations—Remaining performance obligations represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of ~~September~~June 30, ~~2022,~~2023, approximately $~~1,345~~1,464 million of revenue is expected to be recognized from remaining performance obligations in the amount of approximately $~~529~~559 million during the following twelve months, and approximately $~~816~~905 million thereafter. The estimated revenues do not include unexercised contract renewals. The remaining performance obligations exclude future transaction revenue where revenue is recognized as the services are rendered and in the amount to which the Company has the right to invoice.

Deferred Revenue—Revenue recognized for the three months ended ~~September~~June 30, 2023 from amounts in deferred revenue as of March 31, 2023 was $39.1 million. Revenue recognized for the three months ended June 30, 2022 from amounts in deferred revenue as of ~~June 30,~~March 31, 2022 was $32.2 ~~million.~~ million.

Revenue recognized for the ~~three~~six months ended ~~September~~June 30, ~~2021~~2023 from amounts in deferred revenue as of ~~June 30, 2021~~December 31, 2022 was $~~27.5~~34.6 ~~million~~.

million. Revenue recognized for the ~~nine~~six months ended ~~September~~June 30, 2022 from amounts in deferred revenue as of December 31, 2021 was $~~30.7~~30.2 million. ~~Revenue recognized for the nine months ended September 30, 2021 from amounts in deferred revenue as of December 31, 2020 was $26.6~~ ~~million.~~

Contract Assets and Liabilities—The opening and closing balances of the Company’s receivables, contract assets and contract liabilities from contracts with customers are as follows (in thousands):

September 30,

December 31,

2022

2021

Accounts receivables-net of allowances

$
98,194

$
78,793

Deferred contract costs

15,788

15,069

Long-term deferred contract costs

18,818

22,117

Other assets (accounts receivable, non-current)

17,091

8,622

Deferred revenues

33,602

31,042

Other liabilities (deferred revenues, non-current)

1,340

1,574


	June 30,		December 31,
	2023		2022
Accounts receivables-net of allowances	$	96,139	$	98,353
Deferred contract costs		16,871		16,556
Long-term deferred contract costs		19,480		20,161
Other assets (accounts receivable, non-current)		14,700		16,437
Deferred revenues		40,064		35,239
Other liabilities (deferred revenues, non-current)		1,139		1,240

A summary of the activity impacting deferred revenue balances during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022 is presented below (in thousands):


	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Balance at beginning of period	$	34,742		$	30,756		$	32,616		$	28,515		$	41,422		$	34,900		$	36,479		$	32,616
Revenue recognized1		(94,997	)		(87,649	)		(277,250	)		(250,379	)		(111,533	)		(92,823	)		(214,718	)		(182,255	)
Additional amounts deferred1		95,197			88,016			279,576			252,987			111,314			92,665			219,442			184,381
Balance at end of period	$	34,942		$	31,123		$	34,942		$	31,123		$	41,203		$	34,742		$	41,203		$	34,742

Classified as:
Current	$	33,602		$	29,384		$	33,602		$	29,384		$	40,064		$	33,298		$	40,064		$	33,298
Non-current		1,340			1,739			1,340			1,739			1,139			1,444			1,139			1,444
Total deferred revenue	$	34,942		$	31,123		$	34,942		$	31,123		$	41,203		$	34,742		$	41,203		$	34,742

1 Amounts include total revenue deferred and recognized during each respective period.

A summary of the activity impacting the deferred contract costs during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 is presented below (in thousands):


	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Balance at beginning of period	$	35,890		$	28,667		$	37,186		$	26,361		$	37,551		$	36,948		$	36,717		$	37,186
Costs amortized		(4,444	)		(4,164	)		(13,072	)		(11,481	)		(4,637	)		(4,407	)		(9,423	)		(8,628	)
Additional amounts deferred		3,160			8,223			10,492			17,846			3,437			3,349			9,057			7,332
Balance at end of period	$	34,606		$	32,726		$	34,606		$	32,726		$	36,351		$	35,890		$	36,351		$	35,890

Classified as:
Current	$	15,788		$	13,833		$	15,788		$	13,833		$	16,871		$	16,021		$	16,871		$	16,021
Non-current		18,818			18,893			18,818			18,893			19,480			19,869			19,480			19,869
Total deferred contract costs	$	34,606		$	32,726		$	34,606		$	32,726		$	36,351		$	35,890		$	36,351		$	35,890

6.5.

FAIR VALUE measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Private Warrants—As of ~~September~~June 30, ~~2022,~~2023, the Company's Private Warrants are recognized as liabilities and ~~contingent consideration liability related to a business acquisition are~~ measured at fair value on a recurring basis.

The Private Warrants are valued using Level 1 and Level 2 inputs within the Black-Scholes ~~option-pricing~~option pricing model. The assumptions utilized under the Black-Scholes option pricing model require judgments and estimates. Changes in these inputs and assumptions could affect the measurement of the estimated fair value of the Private Warrants. Accordingly, the Private Warrants are classified within Level 2 of the fair value hierarchy.

The valuation of the Private Warrants as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was determined using the Black-Scholes option pricing model using the following assumptions:


	September 30,			December 31,			June 30,			December 31,
	2022			2021			2023			2022
Expected term (in years)		3.8			4.6			3.1			3.6
Expected volatility		35	%		35	%		34	%		38	%
Expected dividend yield		0	%		0	%		0	%		0	%
Risk-free interest rate		4.17	%		1.20	%		4.48	%		4.15	%

The estimated fair value of each Private Warrant using the Company's stock price on the valuation date and above assumptions was $~~2.19~~3.12 and $~~3.51~~2.05 as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Contingent Consideration Liability—The contingent consideration liability related to the acquisition of Safekeep (see Note 4)3), recognized within other liabilities on the condensed consolidated balance sheet, is adjusted each reporting period for changes in fair value, which can result from changes in anticipated payments and changes in assumed discount rates. These inputs are unobservable in the market and therefore categorized as Level 3 inputs.

The estimated fair value of the contingent consideration ~~at the date of acquisition~~ was determined using probability-weighted discounted cash flows and a Monte Carlo simulation model. The discount rate, based on the Company's estimated cost of debt, was ~~9.0~~10%.

~~Since~~As of December 31, 2022, the ~~date~~contingent consideration liability had a fair value of $0.1 million. As of June 30, 2023, there were no significant changes to the inputs used within the Monte Carlo simulation model and the estimated fair value of the ~~business acquisition of Safekeep, there has been~~ contingent consideration liability was $0.1 million. The contingent consideration liability is classified within other liabilities in the accompanying condensed consolidated balance sheets. The Company did not recognize any change in the estimated fair value of the ~~Company's~~ contingent consideration liability during the three and ~~the Company has not recognized any gain or loss for a change in the estimated fair value of contingent consideration since the date of acquisition.~~six months ended June 30, 2023.

Interest Rate Cap—In August 2022, the Company entered into two interest rate cap agreements to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt ~~(See~~(see Note ~~15)~~14). The fair value of the interest rate cap agreements was estimated using inputs that were observable or that could be corroborated by observable market data and therefore was classified within Level 2 of the fair value hierarchy as of ~~September~~June 30, 2023 and December 31, 2022.

The Company did not designate its interest rate cap agreements as hedging instruments and records the changes in fair value within earnings. As of ~~September~~June 30, 2023 and December 31, 2022, the interest rate cap agreements had a fair value of $~~12.3~~13.0 million and $12.0 million, respectively, classified within other assets in the accompanying condensed consolidated balance ~~sheet.~~sheets.

The following table presents the fair value of the assets and liabilities measured at fair value on a recurring basis as of ~~September~~June 30, ~~2022~~2023 (in thousands):


	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Interest rate cap		12,279		—		12,279		—	$	12,960	$	—	$	12,960	$	—
Total Assets	$	12,279	$	—	$	12,279	$	—	$	12,960	$	—	$	12,960	$	—
Liabilities
Contingent consideration related to business acquisition	$	200	$	—	$	—	$	200	$	100	$	—	$	—	$	100
Private warrants		39,026		—		39,026		—
Private Warrants										55,585		—		55,585		—
Total Liabilities	$	39,226	$	—	$	39,026	$	200	$	55,685	$	—	$	55,585	$	100

The following table presents the fair value of the assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2021~~2022 (in thousands):

Liabilities

Fair Value

Level 1

Level 2

Level 3

Private warrants

$
62,478

$
—

$
62,478

$
—

Total

$
62,478

$
—

$
62,478

$
—


	Fair Value		Level 1		Level 2		Level 3
Assets
Interest rate cap	$	11,951	$	—	$	11,951	$	—
Total Assets	$	11,951	$	—	$	11,951	$	—
Liabilities
Contingent consideration related to business acquisition	$	100	$	—	$	—	$	100
Private Warrants		36,405		—		36,405		—
Total Liabilities	$	36,505	$	—	$	36,405	$	100

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis—The Company has assets that under certain conditions are subject to measurement at fair value on a nonrecurring basis. These assets include those associated with acquired businesses, including goodwill and other intangible assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023, the Company recognized impairment charges of goodwill and ~~2021,~~definite-lived intangible assets (see Note 11). During the three and six months ended June 30, 2022, the Company recognized no impairment related to these assets.

Fair Value of Other Financial Instruments—The following table presents the carrying amounts, net of debt discount, and the estimated fair values of the Company’s financial instruments that are not recorded at fair value on the condensed consolidated balance sheets (in thousands):

September 30, 2022

December 31, 2021

Carrying

Estimated

Carrying

Estimated

Description

Amount

Fair Value

Amount

Fair Value

Term B Loan, including current portion

$
792,270

$
768,195

$
798,073

$
799,000


	June 30, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
Description	Amount		Fair Value		Amount		Fair Value
Term B Loan, including current portion	$	786,442	$	786,030	$	790,331	$	766,260

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar instruments and fluctuates with changes in applicable interest rates among other factors. The fair value of long-term debt is classified as a Level 2 measurement in the fair value hierarchy and is established based on observable inputs in less active markets.

7.6.

INCOME TAXES

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA contains several revisions to the Internal Revenue Code, including a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022. While these tax law changes have no immediate effect on our results of operations and are not expected to have a material adverse effect on our results of operations going forward, we will continue to evaluate its impact as further information becomes available.

The Company’s effective tax rate for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was ~~26.1~~2.3% and ~~22.0~~39.4%, respectively. The effective tax rate for ~~the~~ three months ended ~~September~~June 30, ~~2022~~2023 was ~~higher~~lower than the effective tax rate for ~~the~~ three months ended ~~September~~June 30, ~~2021~~2022 primarily due to ~~non-deductible executive compensation.~~the tax benefit received related to share-based compensation expense in the amount of $2.7 million, as well as the tax benefit recognized related to the impairment of certain intangible assets in the amount of $1.3 million.

The Company's effective tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 was ~~25.4~~3.1% and ~~22.1~~25.2%, respectively. The effective tax rate for ~~the nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~higher~~lower than the effective tax rate for ~~the nine~~six months ended ~~September~~June 30, ~~2021~~2022 primarily due to ~~non-deductible executive~~the tax benefit received related to share-based compensation ~~partially offset by~~expense in the amount of $3.2 million, the tax benefit recognized related to the impairment of certain intangible assets in the amount of $1.3 million, as well as the tax benefit associated with the re-measurement of the ~~Company's~~company's deferred tax liability for changes in state tax ~~rates.~~rates in the amount of $2.3 million.

The Company made income tax payments of $~~16.6~~19.8 million and $~~4.7~~38.9 million for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company received negligible refunds from ~~the Internal Revenue Service ("IRS") and~~ various states ~~for~~during the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.

The Company made income tax payments of $~~55.5~~20.0 million and $~~15.1~~39.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company received ~~negligible~~ refunds from ~~the IRS and~~ various states totaling $39 thousand and $50 thousand for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022 ~~and 2021.~~respectively.

As of ~~September~~June 30, ~~2022,~~2023, unrecognized tax benefits were materially consistent with the amount as of December 31, ~~2021. We anticipate this amount~~2022. The Company believes its liability for unrecognized tax benefits, excluding interest and penalties, will ~~decrease from $3.6~~ ~~million to $3.5~~ ~~million~~not significantly change over the following twelve ~~months, as the increase related to fiscal year 2022 is offset by decreases related to statute expirations.~~months.

8.7.

accounts receivable

Accounts receivable–Net as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, consists of the following (in thousands):

September 30,

December 31,

2022

2021

Accounts receivable

$
102,884

$
82,584

Allowance for doubtful accounts and sales reserves

(4,690
)

(3,791
)
Accounts receivable–net

$
98,194

$
78,793


	June 30,			December 31,
	2023			2022
Accounts receivable	$	102,013		$	103,692
Allowance for doubtful accounts and sales reserves		(5,874	)		(5,339	)
Accounts receivable–net	$	96,139		$	98,353

As of ~~September~~June 30, 2023 and December 31, 2022, each period had one customer ~~represented 16%~~that accounted for 11% of ~~the Company's net accounts receivable. As of December 31, 2021, no customer represented more than 10% of the Company's net~~ accounts receivable.

Changes to the allowance for doubtful accounts and sales reserves during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022 consist of the following (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Balance at beginning of period

$
4,296

$
4,218

$
3,791

$
4,224

Charges to bad debt and sales reserves

1,100

818

3,036

2,524

Write-offs, net

(706
)

(1,064
)

(2,137
)

(2,776
)
Balance at end of period

$
4,690

$
3,972

$
4,690

$
3,972


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Balance at beginning of period	$	6,866		$	4,161		$	5,339		$	3,791
Charges to bad debt and sales reserves		2,017			704			5,153			1,936
Write-offs, net		(3,009	)		(569	)		(4,618	)		(1,431	)
Balance at end of period	$	5,874		$	4,296		$	5,874		$	4,296

9.8.

OTHER CURRENT ASSETS

Other current assets as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021, consist~~2022 consists of the following (in thousands):


	September 30,		December 31,		June 30,		December 31,
	2022		2021		2023		2022
Prepaid SaaS costs		6,606		5,909	$	7,488	$	7,423
Prepaid insurance		5,820		4,416
Prepaid service fees		5,113		8,623		6,435		5,268
Prepaid software and equipment maintenance		3,912		7,593		4,912		7,638
Prepaid insurance						489		4,062
Non-trade receivables		1,109		8,321		81		690
Other		11,338		11,319		9,835		11,277
Total	$	33,898	$	46,181
Total other current assets					$	29,240	$	36,358

~~10.~~9.

SOFTWARE, EQUIPMENT, AND PROPERTY

Software, equipment, and property as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021, consist~~2022 consists of the following (in thousands):

September 30,

December 31,

2022

2021

Software, licenses and database

$
167,235

$
140,692

Leasehold improvements

33,102

34,880

Computer equipment

32,948

31,635

Building and land

4,910

4,910

Furniture and other equipment

2,780

5,343

Total software, equipment, and property

240,975

217,460

Less accumulated depreciation and amortization

(93,444
)

(81,615
)
Software, equipment, and property—Net

$
147,531

$
135,845


	June 30,			December 31,
	2023			2022
Software, licenses and database	$	198,459		$	175,616
Computer equipment		33,229			33,043
Leasehold improvements		30,697			30,430
Building and land		4,910			4,910
Furniture and other equipment		1,484			1,478
Total software, equipment, and property		268,779			245,477
Less accumulated depreciation and amortization		(115,240	)		(99,034	)
Software, equipment, and property—Net	$	153,539		$	146,443

Depreciation and amortization expense related to software, equipment and property was $~~6.7~~8.8 million and $~~7.7~~6.7 million for the three months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

Depreciation and amortization expense related to software, equipment and property was $~~20.2~~18.0 million and $~~18.2~~13.5 million for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

~~11.~~10.

LEASES

The Company leases real estate in the form of office space and data center facilities. Generally, at the inception of the contract, the term for real estate leases ranges from 1to 17years and the term for equipment leases is 1to 3years. Some real estate leases include options to renew that can extend the original term by 3to 5years.

The components of lease expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Operating lease costs

$
1,871

$
4,043

$
7,545

$
13,179

Variable lease costs

585

552

1,996

1,615

Total lease costs

$
2,456

$
4,595

$
9,541

$
14,794


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Operating lease costs	$	1,486	$	2,108	$	2,989	$	5,674
Variable lease costs		1,017		574		1,901		1,411
Total lease costs	$	2,503	$	2,682	$	4,890	$	7,085

~~Supplemental~~The Company made cash ~~flow~~payments for operating leases of $1.4 million and ~~other information related to leases~~$3.2 million for the three ~~and nine~~ months ended ~~September~~June 30, 2023 and 2022, ~~and 2021 were as follows (in thousands):~~respectively.

The Company made cash payments for operating leases of $2.0 million and $5.7 million for the six months ended June 30, 2023 and 2022, respectively.

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Cash payments for operating leases

$
1,287

$
2,872

$
7,033

$
8,870

Operating lease assets obtained in exchange for lease liabilities

2,257

—

2,366

2,365

~~12.~~11.

GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets are primarily the result of business acquisitions.

Goodwill—~~Goodwill~~We evaluated goodwill for impairment, due to the events described below, which indicated that the carrying amount of the China reporting unit was in excess of its estimated fair value.

During the three months ended June 30, 2023, the Company's China reporting unit experienced adverse impacts as a result of changes in market conditions and increases in interest rates, which contributed to reduced forecasted revenues and reduced projected future cash flows.

As a result of these adverse impacts, the Company performed a quantitative assessment of goodwill impairment by comparing the fair value of its China reporting unit to its carrying value, including goodwill. When performing the assessment, the Company determined the fair value of its China reporting unit based on forecasted future cash flows. Based on the Company's forecast of the future cash flows of its China reporting unit, it was determined the carrying value of goodwill for its China reporting unit was impaired. As a result, the Company recorded a goodwill impairment charge of $77.4 million.

The Company used a quantitative approach to measure the fair value of its China reporting unit using a discounted cash flow approach, which is a Level 3 measurement. The discounted cash flow analysis requires significant judgments, including estimates of future cash flows, which are dependent on internal forecasts and determination of the Company’s weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used for the China reporting unit in ~~connection with business acquisitions.~~the Company’s analysis was 12.5%.

No goodwill impairments were recorded during the three ~~and nine~~or six months ended ~~September~~June 30, ~~2022 and 2021.~~2022.

The ~~Company performs its annual~~following table presents the gross amount, accumulated impairment ~~assessment as of September 30 of each fiscal year. As of September 30, 2022, the annual impairment assessment indicated~~ no ~~impairment~~loss and ~~there was~~ no ~~change to the~~ carrying amount of goodwill ~~due to impairment.~~as of June 30, 2023 and December 31, 2022 (in thousands):


			Accumulated			Net
	Gross Amount		Impairment Loss			Carrying Amount
Balance as of December 31, 2022	$	1,520,926	$	(25,797	)	$	1,495,129
Balance as of June 30, 2023		1,520,926		(103,202	)		1,417,724

~~Based on the quantitative assessment~~18

The accumulated impairment loss as of ~~September 30,~~December 31, 2022 was recognized during the Company determined that its China reporting unit had an estimated fair value that was not significantly in excess of its carrying value. While it was concluded that the goodwill assigned to the China reporting unit was not impaired, it could be at risk of future impairment if the Company's long-term financial objectives are not achieved or if there are changes to estimates and assumptions from a number of factors, many of which are outside the Company's control. As a result of the assessment, the Company did no~~t recognize an impairment charge related to the China reporting unit.~~

~~As of September 30, 2021, the annual impairment assessment indicated~~ no ~~impairment and there was~~ no ~~change to the carrying amount of goodwill due to impairment.~~year ended December 31, 2019.

Changes in the ~~net~~ carrying amount of goodwill during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were as follows (in thousands):

Net

Carrying

Amount

Balance as of December 31, 2021

$
1,466,884

Acquisition of Safekeep, Inc.

27,383

Balance as of September 30, 2022

$
1,494,267


	Net
	Carrying
	Amount

Balance as of December 31, 2022	$	1,495,129
Impairment		(77,405	)
Balance as of June 30, 2023	$	1,417,724

Intangible Assets—~~The Company’s intangible assets are primarily the result of business acquisitions.~~

During the three ~~and nine~~ months ended ~~September~~June 30, ~~2022 and 2021, the Company did~~ no~~t record an impairment charge.~~

The Company performs its annual impairment assessment of indefinite life intangible assets as of September 30 of each fiscal year. As of September 30, 2022 and 2021, the annual impairment assessment indicated no ~~impairment.~~

~~During February 2022,~~2023, the Company recorded $~~4.8~~ ~~million~~an impairment charge to its China reporting unit's customer relationships and acquired technologies intangible assets. The Company's forecast of ~~acquired technology~~the revenue and expense cash flow of the China reporting unit indicated the carrying amounts of the intangible assets ~~as a result~~were not recoverable and therefore the Company recorded an impairment charge of $5.3 million.

No intangible asset impairments were recorded during the ~~acquisition of Safekeep (see Note 4).~~three or six months ended June 30, 2022.

The intangible assets balance as of ~~September~~June 30, ~~2022,~~2023 is reflected below (in thousands):


		Weighted-											Weighted-
		Average											Average
	Estimated	Remaining		Gross					Net		Estimated		Remaining		Gross					Net
	Useful Life	Useful Life		Carrying		Accumulated			Carrying		Useful Life		Useful Life		Carrying		Accumulated			Carrying
	(Years)	(Years)		Amount		Amortization			Amount		(Years)		(Years)		Amount		Amortization			Amount
Customer relationships	16–18		12.6	$	1,299,750	$	(392,029	)	$	907,721		18		11.8	$	1,291,830	$	(443,169	)	$	848,661
Acquired technologies	3–7		2.0		187,950		(142,511	)		45,439	3–7			1.6		184,640		(159,707	)		24,933
Subtotal					1,487,700		(534,540	)		953,160						1,476,470		(602,876	)		873,594
Trademarks—indefinite life					190,470		—			190,470						190,470		—			190,470
Total intangible assets				$	1,678,170	$	(534,540	)	$	1,143,630					$	1,666,940	$	(602,876	)	$	1,064,064

The intangible assets balance as of December 31, ~~2021,~~2022 is reflected below (in thousands):


		Weighted-										Weighted-
		Average										Average
	Estimated	Remaining		Gross					Net		Estimated	Remaining		Gross					Net
	Useful Life	Useful Life		Carrying		Accumulated			Carrying		Useful Life	Useful Life		Carrying		Accumulated			Carrying
	(Years)	(Years)		Amount		Amortization			Amount		(Years)	(Years)		Amount		Amortization			Amount
Customer relationships	16–18		13.3	$	1,299,750	$	(337,831	)	$	961,919	16–18		12.3	$	1,299,750	$	(410,095	)	$	889,655
Acquired technologies	3–7	2.3			183,164		(122,318	)		60,846	3–7	1.8			187,950		(149,256	)		38,694
Favorable lease terms	6	0.3			280		(266	)		14
Subtotal					1,483,194		(460,415	)		1,022,779					1,487,700		(559,351	)		928,349
Trademarks—indefinite life					190,470		—			190,470					190,470		—			190,470
Total intangible assets				$	1,673,664	$	(460,415	)	$	1,213,249				$	1,678,170	$	(559,351	)	$	1,118,819

Amortization expense for intangible assets was $~~24.8~~24.7 million and $~~24.7~~24.8 million for the three months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

Amortization expense for intangible assets was $~~74.4~~49.4 million and $~~74.0~~49.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Future amortization expense for the remainder of the year ended December 31, ~~2022~~2023 and the following four years ended December 31 and thereafter for intangible assets as of ~~September~~June 30, ~~2022,~~2023 is as follows (in thousands):


Years Ending December 31:
2022	$	24,818

2023		99,003		49,018
2024		81,417		80,768
2025		72,949		72,454
2026		72,949		72,454
2027				72,454
Thereafter		602,024		526,446
Total	$	953,160	$	873,594

2119

~~13.~~12.

ACCRUED EXPENSES

Accrued expenses as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021, consist~~2022 consists of the following (in thousands):


	September 30,		December 31,		June 30,		December 31,
	2022		2021		2023		2022
Compensation	$	43,263	$	49,510	$	36,414	$	53,530
Professional services		4,178		2,371		5,359		1,877
Software license agreement		2,567		3,265
Royalties and licenses		4,543		2,640		4,362		3,832
Employee insurance benefits		3,586		2,443		2,914		2,749
Sales tax		2,411		2,296		2,763		2,615
Software license agreement						1,500		3,243
Other		3,325		4,166		1,399		3,599
Total	$	63,873	$	66,691
Total accrued expenses					$	54,711	$	71,445

~~14.~~13.

OTHER LIABILITIES

Other liabilities as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021, consist~~2022 consists of the following (in thousands):


	September 30,		December 31,		June 30,		December 31,
	2022		2021		2023		2022

Deferred revenue-non-current	$	1,340	$	1,574
Deferred revenue—non-current					$	1,139	$	1,240
Software license agreement		1,189		4,211		311		1,208
Contingent consideration		200		—		100		100
Total	$	2,729	$	5,785
Other						—		110
Total other liabilities					$	1,550	$	2,658

~~15.~~14.

LONG-TERM DEBT

On September 21, 2021, CCC Intelligent Solutions Inc., an indirect wholly-owned subsidiary of the Company, together with certain of the Company’s subsidiaries acting as guarantors entered into a credit agreement ~~(the~~(as amended, the “2021 Credit Agreement”).

~~The 2021 Credit Agreement replaced the Company’s 2017 First Lien Credit Agreement (the “First Lien Credit Agreement”), dated as of April 27, 2017, as amended as of February 14, 2020.~~

The proceeds of the 2021 Credit Agreement and cash on hand were used to repay all outstanding borrowings under the ~~First Lien Credit Agreement.~~Company's previous credit agreement.

~~2021 Credit Agreement~~—The 2021 Credit Agreement consists of an $800.0 million term loan (“Term B Loan”) and a revolving credit facility for an aggregate principal amount of $250.0 million (the “2021 Revolving Credit Facility” and together with the Term B Loan, the "2021 Credit Facilities"). The 2021 Revolving Credit Facility has a sublimit of $75.0 million for letters of credit. The Company received proceeds of $798.0 million, net of debt discount of $2.0 million, related to the Term B Loan. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the unamortized debt discount was $~~1.7~~1.6 million and $~~1.9~~1.7 million, respectively.

The Company incurred $9.8 million in financing costs related to the Term B Loan. These costs were recorded to a contra debt account and are being amortized to interest expense over the term of the Term B Loan using the effective interest method. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the unamortized financing costs were $~~8.5~~7.7 million and $~~9.5~~8.2 million, respectively.

The Company incurred $3.1 million in financing costs related to the 2021 Revolving Credit Facility. These costs were recorded to a deferred financing fees asset account and are being amortized to interest expense over the term of the 2021 Revolving Credit ~~Facility using the effective interest method.~~Facility. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the deferred financing fees asset balance was $~~2.4~~2.0 million and $~~2.9~~2.3 million, respectively.

~~Beginning with the quarter ended March 31, 2022, the~~The Term B Loan requires quarterly principal payments of $2.0 million until June 30, 2028, with the remaining outstanding principal amount required to be paid on the maturity date, September 21, 2028. Beginning with the fiscal year ~~ending~~ended December 31, 2022, if the Company's leverage ratio, as defined in the 2021 Credit Agreement, is greater than 3.5, the Term B Loan requires a principal prepayment, ~~of principal,~~ subject to certain exceptions, in connection with the receipt of proceeds from certain asset sales, casualty events, and debt issuances by the Company, and up to 50% of annual excess cash flow, as defined in and as further set forth in the 2021 Credit Agreement. When a principal prepayment is required, the prepayment offsets the future quarterly principal payments of the same amount. As of December 31, 2022, the Company's leverage ratio did not exceed the

2220

~~September 30, 2022,~~3.5 threshold and the Company was not subject to the annual excess cash flow calculation and, as such, was no ~~such~~t required to make a principal ~~prepayments are required.~~prepayment.

As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the amount outstanding on the Term B Loan is $~~794.0~~788.0 million and $~~800.0~~792.0 million, ~~respectively. As~~respectively, of ~~September 30, 2022 and December 31, 2021,~~which $8.0 million ~~of the amount outstanding on the Term B Loan~~ is classified as current in the accompanying condensed consolidated balance sheets.

Borrowings under the 2021 Credit ~~Facility~~Facilities bear interest at rates based on the ratio of ~~the Company’s~~CCC Intelligent Solutions Inc. and certain of its subsidiaries’ consolidated first lien net indebtedness to ~~the Company’s and its subsidiaries’~~ consolidated EBITDA for applicable periods specified in the 2021 Credit ~~Facility.~~ Agreement.

On May 19, 2023, the Company entered into Amendment No. 1 to the 2021 Credit Agreement (the “Amendment”) to establish SOFR as the benchmark rate for determining the applicable interest rate, replacing LIBOR. No other terms, including the amount of borrowings, required payments or maturity date, were changed as a result of the Amendment. The Company did not incur any significant costs associated with the Amendment.

Subsequent to the execution of the Amendment, the interest rate per annum applicable to the loans is based on a fluctuating rate of interest equal to the sum of an applicable rate and term SOFR (other than with respect to Euros, Euribor and with respect to British Pounds Sterling, SONIA) with a term as selected by the Company, of one, three or six months (subject to (x) in the case of term loans, a 0.50% per annum floor and (y) in the case of revolving loans, a 0.00% per annum floor.

Prior to the execution of the Amendment, the interest rate per annum applicable to the loans was based on a fluctuating rate of interest equal to the sum of an applicable rate and, at the Company’s election from time to time, either:

(1)

a base rate determined by reference to the highest of (a) the rate last quoted by the Wall Street Journal as the “prime rate,” (b) the federal funds effective rate plus 0.50%, (c) one-month LIBOR plus 1.00% and (d) with respect to the Term B Loan, 1.50% and with respect to the 2021 Revolving Credit Facility, 1.00%, or

(2)

a Eurocurrency rate determined by reference to LIBOR (other than with respect to Euros, Euribor and with respect to British Pounds Sterling, SONIA) with a term as selected by the Company, of one, three or six months (subject to (x) in the case of term loans, a 0.50% per annum floor and (y) in the case of revolving loans, a 0.00% per annum floor).

A quarterly commitment fee of up to 0.50% is payable on the unused portion of the 2021 Revolving Credit Facility. The 2021 Revolving Credit Facility matures on September 21, 2026.

During the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was ~~4.6~~7.4% and ~~3.0~~3.3%, respectively. ~~The~~During the three months ended June 30, 2023 and 2022, the Company made interest payments of $~~9.2~~14.6 million ~~during the three months ended September 30, 2022. There were~~ and $no6.6 ~~interest payments made during the three months ended September 30, 2021.~~million, respectively.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was ~~3.6~~7.1% and ~~3.0~~3.2%, respectively. ~~The~~During the six months ended June 30, 2023 and 2022, the Company made interest payments of $~~21.6~~28.1 million ~~during the nine months ended September 30, 2022. There were~~ and $no12.5 ~~interest payments made during the nine months ended September 30, 2021.~~million, respectively.

The Company ~~issued a~~has an outstanding standby letter of credit for $0.7 million ~~during 2021~~ which reduces the amount available to be borrowed under the 2021 Revolving Credit ~~Facility and as~~Facility. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, $249.3 million was available to be borrowed.

~~In addition, beginning with the three months ended March 31, 2022, the~~The terms of the 2021 Credit Agreement include a financial covenant which requires that, at the end of each fiscal quarter, if the aggregate amount of borrowings under the 2021 Revolving Credit Facility exceeds 35% of the aggregate commitments, ~~the Company’s~~ leverage ratio of CCC Intelligent Solutions Inc. and certain of its subsidiaries cannot exceed 6.25 to 1.00. AsBorrowings under the 2021 Revolving Credit Facility did not exceed 35% of ~~September 30, 2022,~~the aggregate commitments and the Company was not subject to the ~~financial covenant.~~

~~First Lien Credit Agreement—In April 2017, the Company entered into the First Lien Credit Agreement.~~

~~The First Lien Credit Agreement consisted~~leverage test as of ~~a $1.0~~ ~~billion term loan (“First Lien Term Loan”) and revolving credit facilities for an aggregate principal amount of $100.0~~ ~~million (the “First Lien Revolvers”), with a sublimit of $30.0~~ ~~million for letters of credit under the First Lien Revolvers. The Company received proceeds of $997.5~~ ~~million, net of debt discount of $2.5~~ ~~million, related to the First Lien Term Loan.~~

In February 2020, the Company refinanced its long-term debt and entered into the First Amendment to the First Lien Credit Agreement (“First Lien Amendment”). The proceeds of the refinance were used to repay the outstanding balance of the Company's Second Lien Credit Agreement, entered into in April 2017.

~~The First Lien Amendment provided an incremental term loan in the amount of $375.0~~ ~~million. The Company received proceeds from the incremental term loan of $373.1~~ ~~million, net of debt discount of $1.9~~ ~~million.~~

~~In addition, the First Lien Amendment reduced the amount of commitments under the First Lien Revolvers to an aggregate principal amount of $91.3~~ ~~million. The First Lien Revolvers continued to have a sublimit of $30.0~~ ~~million for letters of credit.~~

~~The Company incurred $27.6~~ ~~million and $3.4~~ million in financing costs related to the First Lien Credit Agreement and First Lien Amendment, respectively. These costs were recorded to a contra debt account and were being amortized to interest expense over the term of the First Lien Credit Agreement using the effective interest method.

~~The First Lien Term Loan required (after giving effect to the First Lien Amendment) quarterly principal payments of approximately $3.5~~ million until March 31, 2024, with the remaining outstanding principal amount required to be paid on the maturity date, April 27, 2024. The First Lien Term Loan required a prepayment of principal, subject to certain exceptions, in connection with the receipt of proceeds from certain asset sales, casualty events, and debt issuances by the Company, and up to 50% of annual excess cash flow, as defined in and as further set forth in the First Lien Credit Agreement. When a principal prepayment was required, the prepayment offset the future quarterly principal payments of the same amount. As ofJune 30, 2023 or December 31, ~~2020, subject to the request of the lenders of the First Lien Term Loan, a principal prepayment of up to $~~2022.~~21.9~~ ~~million was required. In April 2021, the Company made a principal prepayment of $1.5~~ ~~million to those lenders who made such a request.~~

~~Using a portion of the proceeds of the Business Combination, the Company made a principal prepayment of $525.0~~ ~~million on July 30, 2021. Subsequently, in September 2021, using the proceeds from the Term B Loan provided in the 2021 Credit Agreement and cash on hand, the Company fully repaid the remaining $804.2~~ ~~million of outstanding borrowings on the First Lien Term Loan.~~

~~Amounts outstanding under the First Lien Credit Agreement bore interest at a variable rate of LIBOR, plus up to~~ ~~3.00% per annum based upon the Company’s leverage ratio, as defined in the First Lien Credit Agreement. A quarterly commitment fee of up to~~ ~~0.50% was payable on the unused portion of the First Lien Revolvers.~~

~~During the three months ended September 30, 2021, the weighted-average interest rate on the outstanding borrowings under the First Lien Term Loan was~~ ~~4.1%. The Company made interest payments of $9.3~~ ~~million during the three months ended September 30, 2021.~~

~~During the nine months ended September 30, 2021, the weighted-average interest rate on the outstanding borrowings under the First Lien Term Loan was~~ ~~4.1%. The Company made interest payments of $36.1~~ ~~million during the nine months ended September 30, 2021.~~

Long-term debt as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022 consists of the following (in thousands):

September 30,

December 31,

2022

2021

Term B Loan

$
794,000

$
800,000

Term B Loan—discount

(1,730
)

(1,926
)
Term B Loan—deferred financing fees

(8,500
)

(9,464
)
Term B Loan—net of discount & fees

783,770

788,610

Less: Current portion

(8,000
)

(8,000
)
Total long-term debt—net of current portion

$
775,770

$
780,610


	June 30,			December 31,
	2023			2022
Term B Loan	$	788,000		$	792,000
Term B Loan—discount		(1,558	)		(1,669	)
Term B Loan—deferred financing fees		(7,655	)		(8,199	)
Term B Loan—net of discount & fees		778,787			782,132
Less: Current portion		(8,000	)		(8,000	)
Total long-term debt—net of current portion	$	770,787		$	774,132

Interest Rate Cap—In August 2022, the Company entered into two interest rate cap agreements to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt. The aggregate notional value of the interest rate cap agreements is $600.0 million with a cap rate of 4.0% and an expiration date of July 31, 2025.

During the three months ended June 30, 2023, the Company transitioned the referenced interest rate within the two interest rate cap agreements from LIBOR to SOFR by terminating the original agreements and simultaneously entering into new agreements. The ~~premium paid~~terms of the new agreements were unchanged except for the referenced interest rate. The Company elected the optional expedients available within ASC 848 to allow for this transition without any modification to the derivative classification of the interest rate cap ~~agreements was $~~agreements.

~~6.3~~ ~~million and recognized in cash flows from operating activities in the accompanying condensed consolidated statement of cash flows.~~ As of ~~September~~June 30, 2023 and December 31, 2022, the aggregate fair value of the interest rate cap agreements was $~~12.3~~13.0 million ~~(see Note 6).~~

~~Interest Rate Swaps~~—In June 2017, the Company entered into three floating to fixed interest rate swap agreements ("Swap Agreements") to reduce its exposure to the variability from future cash flows resulting from interest rate risk related to its floating rate long-term debt. In September 2021, the Company made an aggregate payment ofand $~~10.0~~12.0 million, ~~to extinguish the Swap Agreements which were scheduled to expire in~~ ~~June 2022~~respectively (see Note 5).

~~16.~~15.

Capital stock

Preferred Stock—The Company is authorized to issue up to 100,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of ~~September~~June 30, ~~2022,~~2023, there were no shares of preferred stock issued or outstanding.

Common Stock—The Company is authorized to issue up to 5,000,000,000 shares of common stock with a par value of $0.0001 per share. Each holder of common stock is entitled to one (1) vote for each share of common stock held of record by such holder on all matters voted upon by the stockholders, subject to the restrictions set out in the Company's certificate of incorporation. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors. Upon a liquidation event, subject to the rights of the holders of any ~~Preferred Stock~~preferred stock issued and outstanding at such time, any distribution shall be made on a pro rata basis to the common stockholders.

There were ~~620,117,025~~631,982,491 and ~~609,768,296~~622,072,905 shares of common stock issued and outstanding as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

16.

REDEEMABLE NON-CONTROLLING INTEREST

On March 12, 2020 (the “Close Date”), the Company closed a stock purchase agreement (the “Stock Purchase Agreement”) with a third-party investor (the “Investor”) for purchase by the Investor of Series A Preferred Stock in CCCIS Cayman Holdings Limited (“CCC Cayman”), the parent of the Company’s China operations. On the Close Date, CCC Cayman, a subsidiary of the Company, issued 1,818 shares of Series A Preferred Stock (the “Preferred Shares”) at $7,854 per share to the Investor for net proceeds of $14.2 million. As of June 30, 2023 and December 31, 2022, on an as-converted basis, the Preferred Shares represent an aggregate 10.0% ownership interest of the issued and outstanding capital stock of CCC Cayman, or 8.6% on a fully-diluted basis.

The Preferred Shares are redeemable upon an actual or deemed redemption event as defined in the Stock Purchase Agreement or at the option of the Investor beginning on the five-year anniversary of the Close Date, if an actual or deemed redemption event has not yet occurred. The redemption price, as defined by the Stock Purchase Agreement, is equal to the original issue price of the Preferred Shares, plus 10.0% compound interest per annum on the Preferred Share issue price, plus any declared but unpaid dividends on the Preferred Shares.

The Preferred Shares do not participate in net income or losses.

As of June 30, 2023 and December 31, 2022, the Investor’s ownership in CCC Cayman is classified in mezzanine equity as a redeemable non-controlling interest, because it is redeemable on an event that is not solely in the control of the Company.

During ~~April 2022, certain existing shareholders completed a secondary offering where~~ the ~~selling shareholders sold~~ ~~20,000,000~~ ~~shares of common stock at a price~~three months ended June 30, 2023, the Company determined it was probable the non-controlling interest would become redeemable and began to accrete the ~~public of $9.70~~ ~~per share. The Company did not receive proceeds from~~non-controlling interest to its redemption value. Changes in the ~~sale~~carrying value of the ~~shares by~~non-controlling interest are recorded as adjustments to additional paid-in capital.

The activity impacting the ~~existing stockholders. In connection with the offering, the Company incurred $1.2~~ ~~million of offering costs~~redeemable non-controllable interest during the ~~nine~~three and six months ended ~~September~~June 30, 2023 and 2022 ~~which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss).~~is presented below (in thousands):


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Balance at beginning of period	$	14,179	$	14,179	$	14,179	$	14,179
Accretion of redeemable non-controlling interest		315		—		315		—
Balance at end of period	$	14,494	$	14,179	$	14,494	$	14,179

~~Dividends—In July 2021, the board of directors of CCCIS declared a cash dividend on its common stock. The aggregate cash dividend of $134.6~~ ~~million was paid on August 3, 2021.~~

2422

~~In March 2021, the board of directors of CCCIS declared a cash dividend on its common stock. The aggregate cash dividend of $134.5~~ ~~million was paid on March 17, 2021.~~

17.

STOCK INCENTIVE PLANS

In ~~connection with the closing of the Business Combination,~~July 2021, the 2021 Equity Incentive Plan (the "2021 Plan") was adopted and approved by the Company's board of ~~directors.~~directors and stockholders.

~~Prior to~~Restricted Stock Units—The table below summarizes the ~~Business Combination,~~restricted stock unit ("RSU") activity for the six months ended June 30, 2023:


				Weighted-
				Average
	Shares			Fair Value
Unvested RSUs—December 31, 2022		31,288,688		$	10.34
Granted		11,939,537			8.89
Vested		(3,769,678	)		10.22
Forfeited		(1,142,053	)		10.02
Unvested RSUs—June 30, 2023		38,316,494			9.90

During the six months ended June 30, 2023, the Company ~~maintained its 2017 Stock Option Plan (the “2017 Plan”).~~granted 11,939,537 RSUs, of which 10,351,104 have time-based vesting requirements, and 1,588,433 have performance-based vesting requirements.

~~Upon~~During the ~~adoption and approval~~six months ended June 30, 2023, 3,769,678 RSUs vested, of the 2021 Plan, the 2017 Plan was terminated and each outstanding vested or unvested option, as required under the 2017 Plan, was converted to the 2021 Plan, multiplied by the Exchange Ratio, with the same key terms and vesting requirements. Additionally, the Company maintained a Phantom Stock Plan (the “Phantom Plan”), which ~~provided for the issuance of phantom shares of CCCIS’s common stock (“Phantom Shares”) to eligible employees under the 2017 Plan.~~

~~Awards granted under the 2017 Plan and Phantom Plan had time-based vesting or performance-based with a market condition vesting requirements.~~

The board of directors of CCCIS approved a modification that resulted in vesting of the performance-based awards with a market condition and the Phantom Shares upon Closing of the Business Combination. At the time of modification, the Company estimated a new fair value of the modified awards and recognized $~~203.9~~1,250,236 ~~million of stock-based compensation based on the fair value of the performance-based awards with a market condition and $6.0~~ ~~million of stock-based compensation based on the fair value of the Phantom Shares.~~were withheld for employee tax obligations.

Stock Options—The table below summarizes the stock option activity for the ~~nine~~six months ended ~~September~~June 30, ~~2022:~~2023:

Weighted-

Average

Weighted-

Remaining

Aggregate

Average

Contractual

Intrinsic

Exercise

Life

Value

Shares

Price

(in years)

(in thousands)

Options outstanding—December 31, 2021

55,644,495

$
2.95

6.0

$
469,591

Exercised

(8,367,100
)

2.73

Forfeited and canceled

(272,295
)

4.64

Options outstanding—September 30, 2022

47,005,100

$
2.98

5.2

$
287,659

Options exercisable—September 30, 2022

43,168,788

$
2.73

4.9

$
274,947

Options vested and expected to vest—September 30, 2022

46,752,866

$
2.96

5.1

$
286,840


						Weighted-
						Average
				Weighted-		Remaining		Aggregate
				Average		Contractual		Intrinsic
				Exercise		Life		Value
	Shares			Price		(in years)		(in thousands)
Options outstanding—December 31, 2022		45,249,260		$	2.99		4.9	$	258,470
Exercised		(7,210,806	)		2.89
Forfeited and canceled		(493,652	)		6.96
Options outstanding—June 30, 2023		37,544,802		$	2.95		4.5	$	309,944
Options exercisable—June 30, 2023		35,362,317		$	2.78		4.4	$	298,143
Options vested and expected to vest—June 30, 2023		37,435,411		$	2.95		4.5	$	309,372

The fair value of the options which vested during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was $~~8.4~~2.3 million.

~~Restricted Stock Units~~Cayman Equity Incentive Plan—~~Restricted Stock Units~~In December 2022, the Company adopted the CCCIS Cayman Holdings Employees Equity Incentive Plans (“~~RSUs”~~Cayman Incentive Plans”), which provide for the issuance of stock option awards in CCC Cayman (“Cayman Awards”) ~~are convertible into shares~~to eligible employees of the ~~Company’s common stock upon vesting.~~Company's China subsidiaries.

Awards under the Cayman Incentive Plans are settled in cash and thus accounted for as liability awards. Awards granted under the Cayman Incentive Plans have time-based vesting and expire on the tenth anniversary of the grant date.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company granted ~~15,824,517~~539,400 ~~RSUs, of which~~ ~~14,445,917~~ ~~have time-based vesting requirements,~~ ~~689,325~~ ~~have performance-based vesting requirements and~~ ~~689,275~~ ~~have performance-based with a market condition vesting requirements.~~

stock options under the Cayman Incentive Plans. The ~~valuation~~exercise price of the ~~performance-based RSUs with a market condition~~options granted ~~during~~is equal to the ~~nine months ended September 30, 2022 was determined using a Monte Carlo simulation model using the following assumptions:~~


~~Expected term (in years)~~		~~2.8~~
~~Expected volatility~~		35%
~~Expected dividend yield~~		0%
~~Risk-free interest rate~~		~~2.28~~%

~~The estimated~~ fair value of the ~~performance-based RSUs with a market condition granted during~~underlying shares at the ~~nine months ended September~~grant date. As of June 30, 2023 and December 31, 2022, ~~was $7.42~~1,842,400. and 1,303,000, respectively, of stock options under the Cayman Incentive Plans are outstanding. As of June 30, 2023, none of the outstanding stock options are exercisable.

~~The table below summarizes the RSU activity for the nine months ended September 30, 2022:~~

Weighted-

Average

Shares

Fair Value

Non-vested RSUs—December 31, 2021

18,558,211

$
10.74

Granted

15,824,517

10.13

Vested

(2,081,478
)

11.36

Forfeited

(963,556
)

11.02

Non-vested RSUs—September 30, 2022

31,337,694

10.38

Employee Stock Purchase Plan—~~As of September 30, 2022,~~ ~~6,031,714~~ ~~shares of common stock are reserved for sale under~~In July 2021, the Company adopted the CCC 2021 Employee Stock Purchase Plan ("ESPP"). ~~The aggregate number of shares reserved for sale under the ESPP increases on January 1 by the lesser of~~ 1~~% of the total numbers of shares outstanding or a lesser amount as determined by the board of directors.~~

~~As of September~~During the six months ended June 30, ~~2022,~~2023, ~~408,879~~179,338 shares ~~had been~~were sold under the ESPP.

The fair value of the ESPP purchase rights sold during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was estimated using the ~~Black Scholes~~Black-Scholes option pricing model with the following assumptions:


Expected term (in years)		0.5
Expected volatility		4751%
Expected dividend yield		0%
Risk-free interest rate		~~0.2~~2.5%

~~Company Earnout Shares—Pursuant to the Business Combination Agreement, CCCIS shareholders and option holders, subject to continued employment, have the right to receive up to an additional~~ ~~13.5~~ ~~million and~~ ~~1.5~~ ~~million shares of common stock, respectively, if before the tenth anniversary of the Closing, (a) the share price has been greater than or equal to $15.00~~ ~~per share for any~~ ~~twenty~~ ~~trading days within any~~ ~~thirty~~ ~~consecutive trading day period beginning after Closing, or (b) there is a change in control, as defined in the Business Combination Agreement.~~

The fair value of the Company Earnout Shares was estimated on the date of grant, using the Monte Carlo simulation method. Compensation expense on the shares granted to option holders was recorded ratably over the implied service period of five months beginning on July 30. 2021. During the three months ended September 30, 2021, the Company recognized $23~~8.1~~

~~million of stock-based compensation expense related to the Company Earnout Shares.~~

Stock-Based Compensation—Stock-based compensation expense has been recorded in the accompanying condensed consolidated statements of operations and comprehensive (loss) income ~~(loss)~~ as follows for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Cost of revenues

$
1,657

$
12,169

$
4,167

$
12,563

Research and development

5,373

35,472

14,433

36,748

Sales and marketing

6,890

58,770

18,331

60,060

General and administrative

14,802

113,465

43,838

126,042

Total stock-based compensation expense

$
28,722

$
219,876

$
80,769

$
235,413


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Cost of revenues	$	2,299	$	1,661	$	4,199	$	2,510
Research and development		6,600		5,530		12,475		9,060
Sales and marketing		8,749		6,611		16,008		11,441
General and administrative		17,838		14,601		32,038		29,036
Total stock-based compensation expense	$	35,486	$	28,403	$	64,720	$	52,047

As of ~~September~~June 30, ~~2022,~~2023, there was $~~185.6~~210.1 million of unrecognized stock compensation expense related to ~~non-vested~~unvested time-based awards which is expected to be recognized over a weighted-average period of ~~3.1~~ 2.9years. As of ~~September~~June 30, ~~2022,~~2023, there was $~~81.9~~58.5 million of unrecognized stock-based compensation expense related to ~~non-vested~~unvested performance-based awards which is expected to be recognized over a weighted-average period of ~~1.6~~1.3 years.

18.

WARRANTS

Upon consummation of the Business Combination, ~~(see Note 3),~~ the Company assumed ~~the outstanding~~ publicly-traded warrants ("Public ~~Warrants~~Warrants") and warrants sold in a private placement ("Private ~~Warrants~~Warrants") issued by Dragoneer.

Public Warrants were only able to be exercised for a whole number of shares of the Company’s common stock. All Public Warrants had an exercise price of $11.50 per share, subject to adjustment, beginning on August 29, 2021, and were to expire on July 30, 2026 or earlier upon redemption or liquidation.

OnIn November ~~29,~~ 2021, the Company announced that it had elected to redeem all of the outstanding Public Warrants on December 29, 2021. Each Public Warrant not exercised ~~before 5:00 p.m. Eastern Daylight Time on December 29, 2021~~by the exercise deadline was redeemed by the Company for $0.10 ~~and~~. Concurrent with the redemption, the Public Warrants ~~subsequently~~ ceased trading on the New York Stock ~~Exchange.~~

~~Of the~~ ~~17,299,983~~ ~~Public Warrants that were outstanding as of the closing of the Business Combination,~~ ~~10,638~~ ~~warrants were exercised for cash proceeds of $0.1~~ ~~million~~Exchange and~~15,876,341~~ ~~were exercised on a cashless basis in exchange for an aggregate of~~ ~~4,826,339~~ ~~shares of common stock. The Company paid $0.1~~ ~~million to redeem the remaining~~ ~~1,413,004~~ ~~unexercised Public Warrants. As of December 31, 2021, there were~~ no Public Warrants remained outstanding.

The ~~Private Warrants are identical to the Public Warrants underlying the shares sold in Dragoneer’s initial public offering. Additionally, the~~ Private Warrants are exercisable on a cashless basis and are non-redeemable, so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

Private Warrants may only be exercised for a whole number of shares of the Company’s common stock. Each whole Private Warrant entitles the registered holder to purchase one share of the Company’s common stock. All warrants have an exercise price of $11.50 per share, subject to adjustment, beginning on August 29, 2021, and will expire on July 30, 2026 or earlier upon redemption or liquidation.

There were no exercises or redemptions of the Private Warrants during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had 17,800,000 Private Warrants outstanding.

The Company recognized a loss of $20.4 million and income of $~~0.3~~ ~~million and $23.5~~21.0 million as a change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive (loss) income ~~(loss)~~ for the three ~~and nine~~ months ended ~~September~~June 30, 2023 and 2022, respectively.

The Company recognized ~~an expense~~a loss of $~~26.9~~19.2 million and income of $23.1 million as a change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive (loss) income ~~(loss)~~ for the ~~three and nine~~six months ended ~~September~~June 30, ~~2021.~~2023 and 2022, respectively.

As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company’s warrant liability was $~~39.0~~55.6 million and $~~62.5~~36.4 million, respectively.

19.

COMMITMENTS

Purchase Obligations—The Company has long-term agreements with suppliers and other parties related to licensing data used in its products and services, outsourced data center, disaster recovery, and ~~software as a service~~SaaS that expire at various dates through2031. As of ~~September~~June 30, ~~2022,~~2023, there were no material changes from the amounts disclosed as of December 31, ~~2021.~~2022.

Guarantees—The Company’s services and solutions are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and substantially in accordance with the Company’s services and solutions documentation under normal use and circumstances. The Company’s services and solutions are generally warranted to be performed in a professional manner and to materially conform to the specifications set forth in the related customer contract. The Company’s arrangements also include certain provisions for indemnifying customers against liabilities, subject to customary limitations, if its services and solutions infringe a third party’s intellectual property rights.

To date, the Company has not incurred any material costs as a result of such indemnifications or commitments and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

Employment Agreements—The Company is a party to employment agreements with key employees that provide for compensation and certain other benefits. These agreements also provide for severance and bonus payments under certain circumstances.

20.

LEGAL PROCEEDINGS AND CONTINGENCIES

In the ordinary course of business, the Company is from time to time, involved in various pending or threatened legal actions. The litigation process is inherently uncertain, and it is possible that the resolution of such matters might have a material adverse effect upon the Company’s consolidated financial condition and/or results of operations. The Company’s management believes, based on current information, matters currently pending or threatened are not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

21.

ReLATED PARTIES

The Company has engaged in transactions within the ordinary course of business with entities affiliated with its principal equity ~~owners.~~owners and directors.

The following table summarizes revenues recognized and expenses incurred ~~expenses~~ with entities affiliated with one of its principal equity owners for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Revenues
Credit card processing	$	233	$	122	$	574	$	269	$	274	$	198	$	508	$	341
Expenses
Employee health insurance benefits		716		755		2,353		2,190		953		823		1,821		1,639
Human resources support services		59		53		196		194		64		84		178		137
Sales tax processing and license fees for tax information		245	*			443	*		^			20	^			198

*Not ~~material~~significant

^ Not a related party during the three and six months ended June 30, 2023.

The following table summarizes amounts receivable and due to entities affiliated with one of its principal equity owners as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):

September 30,

December 31,

June 30,

December 31,

2022

2021

2023

2022

Receivables

Credit card processing

Payables

Employee health insurance benefits

208

232

209

501

Human resources support services

Sales tax processing and license fees for tax information

*Not ~~material~~significant

^ Not a related party as of June 30, 2023.

As of October 2022, the entity which provided sales tax processing and license fees for tax information is no longer affiliated with a director of the Company and is no longer a related party.

22.

NET (LOSS) INCOME ~~(LOSS)~~ PER SHARE

The Company calculates basic earnings per share by dividing the net (loss) income ~~(loss)~~attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. The diluted earnings per share is computed by assuming the exercise, settlement and vesting of all potential dilutive common stock equivalents outstanding for the period using the treasury stock method. The Company excludes common stock equivalent shares from the calculation if their effect is anti-dilutive. In a period where the Company is in a net loss position, the diluted loss per share is calculated using the basic share count.

~~The~~ ~~8,625,000~~ Sponsor Vesting Shares that are issued and outstanding as of September 30, 2022 are excluded from the weighted average number of shares of common stock outstanding until the vesting requirement is met and the restriction is removed.

The following table sets forth a reconciliation of the numerator and denominator used to compute basic and diluted earnings per share of common stock (in thousands, except for share and per share data).


	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2023			2022		2023			2022
Numerator
Net (loss) income	$	(97,344	)	$	15,564	$	(95,160	)	$	27,539
Accretion of redeemable non-controlling interest		(315	)		—		(315	)		—
Net (loss) income attributable to common stockholders	$	(97,659	)	$	15,564	$	(95,475	)	$	27,539

Denominator
Weighted average shares of common stock—basic		621,235,776			605,948,628		618,740,340			604,534,589
Dilutive effect of stock-based awards		—			34,016,068		—			36,115,708
Weighted average shares of common stock—diluted		621,235,776			639,964,696		618,740,340			640,650,297
Net (loss) income per share:
Basic	$	(0.16	)	$	0.03	$	(0.15	)	$	0.05
Diluted	$	(0.16	)	$	0.02	$	(0.15	)	$	0.04

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Numerator

Net income (loss)

$
9,795

$
(189,782
)

$
37,334

$
(191,050
)
Denominator

Weighted average shares of common stock - basic

609,421,073

566,454,782

606,181,316

525,877,533

Dilutive effect of stock-based awards

34,161,849

—

36,027,306

—

Weighted average shares of common stock - diluted

643,582,922

566,454,782

642,208,622

525,877,533

Net income (loss) per share:

Basic

$
0.02

$
(0.34
)

$
0.06

$
(0.36
)
Diluted

$
0.02

$
(0.34
)

$
0.06

$
(0.36
)

Approximately ~~8,224,561~~30,191,730 and ~~33,220,634~~22,162,166 common stock equivalent shares were excluded from the computation of diluted per share amounts for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, because their effect was anti-dilutive.

Approximately ~~8,250,431~~30,147,441 and ~~28,940,767~~14,336,893 common stock equivalent shares were excluded from the computation of diluted per share amounts for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, because their effect was anti-dilutive.

As part of the Business Combination, 8,625,000 shares issued and held by Dragoneer (the “Sponsor Vesting Shares”) became non-transferable and subject to forfeiture on the tenth anniversary of Closing if neither of the defined triggering events has occurred. The Sponsor Vesting Shares are issued and outstanding as of June 30, 2023 and December 31, 2022 and excluded from the weighted average number of shares of common stock outstanding until the vesting requirement is met and the restriction is removed.

23.

SEGMENT INFORMATION and information about geographic areas

The Company operates in one operating segment. The chief operating decision maker for the Company is the chief executive officer. The chief executive officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by type of service and geographic region, for purposes of allocating resources and evaluating financial performance.

Revenues by geographic area, presented based upon the location of the customer are as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

United States

$
196,727

$
175,297

$
572,417

$
496,784

China

2,007

1,331

5,925

4,421

Total revenues

$
198,734

$
176,628

$
578,342

$
501,205


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
United States	$	209,972	$	190,852	$	413,000	$	375,691
China		1,738		1,934		3,630		3,918
Total revenues	$	211,710	$	192,786	$	416,630	$	379,609

Software, equipment and property, net by geographic area are as follows (in thousands):


	September 30,		December 31,			June 30,		December 31,
	2022		2021			2023		2022
United States	$	147,477	$	135,784	��	$	153,392	$	146,398
China		54		61			147		45
Total software, equipment and property-net	$	147,531	$	135,845		$	153,539	$	146,443

24.

GAIN ON Sale of cost method investment

During February 2022, the Company received cash proceeds of $3.9 million in exchange for its equity interest in an investee as a result of the acquisition of the investee. The Company had been accounting for its investment using the cost method and recognized a gain of $3.6 million during the ~~nine~~six months ended ~~September~~June 30, 2022. The investment’s carrying value was $0.3 million ~~and was included within other assets on~~at time of the ~~accompanying condensed consolidated balance sheet as of December 31, 2021.~~acquisition. The Company no longer has any ownership interest in the investee.

2927

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the forward-looking statements included herein. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” as set forth elsewhere in this Quarterly Report on Form 10-Q.

Unless otherwise indicated or the context otherwise requires, references to “CCC,” the “Company,” “we,” “us,” “our” and other similar terms refer to ~~Cypress Holdings Inc. and its consolidated subsidiaries prior to the Business Combination and to~~ CCC Intelligent Solutions Holdings Inc. and its consolidated ~~subsidiaries after giving effect to the Business Combination.~~subsidiaries.

Business Overview

Founded in 1980, CCC is a leading provider of innovative cloud, mobile, ~~AI,~~artificial intelligence ("AI"), telematics, hyperscale technologies and applications for the property and casualty (“P&C”) insurance economy. Our SaaS platform connects trading partners, facilitates commerce, and supports mission-critical, AI-enabled digital workflows. Leveraging decades of deep domain experience, our industry-leading platform processes more than $100 billion in annual transaction value across this ecosystem, digitizing workflows and connecting more than ~~30,000~~35,000 companies across the P&C insurance economy, including insurance carriers, collision repairers, parts suppliers, automotive manufacturers, financial institutions and others.

Our business has been built upon two foundational pillars: automotive insurance claims and automotive collision repair. For decades we have delivered leading software solutions to both the insurance and repair industries, including pioneering Direct Repair Programs (“DRP”) in the United States (“U.S.”) beginning in 1992. Direct Repair Programs connect auto insurers and collision repair shops to create business value for both parties, and require digital tools to facilitate interactions and manage partner programs. Insurer-to-shop DRP connections have created a strong network effect for CCC’s platform, as insurers and repairers both benefit by joining the largest network to maximize opportunities. This has led to a virtuous cycle in which more insurers on the platform drives more value for the collision shops on the platform, and vice versa.

We believe we have become a leading insurance and repair SaaS provider in the U.S. by increasing the depth and breadth of our SaaS offerings over many years. Our insurance solutions help insurance carriers manage mission-critical workflows ~~from~~across the claims ~~to underwriting,~~lifecycle, while building smart, dynamic experiences for their own customers. Our software integrates seamlessly with both legacy and modern systems alike and enables insurers to rapidly innovate on our platform. Our repair solutions help collision repair facilities achieve better performance throughout the collision repair cycle by digitizing processes to drive business growth, streamline operations, and improve repair quality. We have more than 300 insurers on our network, connecting with over ~~27,500~~29,000 repair facilities through our multi-tenant cloud platform. We believe our software is the architectural backbone of insurance DRP programs and is the primary driver of material revenue for our collision shop customers and a source of material efficiencies for our insurance carrier customers.

Our platform is designed to solve the ~~many-to-many~~"many-to-many" problem faced by the insurance economy. There are numerous internally and externally developed insurance software solutions in the market today, with the vast majority of applications focused on insurance-only use cases and not on serving the broader insurance ecosystem. We have prioritized building a leading network around our automotive insurance and collision repair pillars to further digitize interactions and maximize value for our customers. We have tens of thousands of companies on our platform that participate in the insurance economy, including insurers, repairers, parts suppliers, automotive manufacturers, and financial institutions. Our solutions create value for each of these parties by enabling them to connect to our vast network to collaborate with other companies, streamline operations, and reduce processing costs and dollars lost through claims management inefficiencies, or claims leakage. Expanding our platform has added new layers of network effects, further accelerating the adoption of our software solutions.

We have processed more than $1 trillion of historical data across our network, allowing us to build proprietary data assets that leverage insurance claims, vehicle repair, automotive parts and other vehicle-specific information. We believe we are uniquely positioned to provide data-driven insights, analytics, and AI-enhanced workflows that strengthen our solutions and improve business outcomes for our customers. Our ~~suite~~Smart Suite of AI solutions increases automation across existing ~~insurer~~insurance and repair processes including vehicle damage detection, claim triage, repair estimating, and intelligent claims ~~review, and subrogation.~~review. We deliver real-world AI with more than 95100 U.S. auto insurers actively using AI-powered solutions in production environments. We have processed more than 914 million unique claims using CCC deep learning AI as of December 31, ~~2021,~~2022, an increase of more than ~~80 percent~~50% over December 31, ~~2020.~~2021.

One of the primary obstacles facing the P&C insurance economy is increasing complexity. Complexity in the P&C insurance economy is driven by technological advancements, Internet of Things (“IoT”) data, new business models, supply chain disruption and changing ~~customer~~consumer expectations. We believe digitization plays a critical role in managing this growing complexity while meeting ~~customer~~consumer expectations. Our technology investments are focused on digitizing complex processes and interactions across our

ecosystem, and we believe we are well positioned to power the P&C insurance economy of the future with our data, network, and platform.

While our position in the P&C insurance economy is grounded in the automotive insurance sector, the largest insurance sector in the U.S. representing nearly half of Direct Written Premiums (“DWP”), we believe our integrations and cloud platform are capable of driving innovation across the entire P&C insurance economy. Our customers are increasingly looking for CCC to expand its solutions to other parts of their business where they can benefit from our technology, service, and partnership. In response, we are investing in new solutions that we believe will enable us to digitize the entire automotive claims lifecycle, and over time expand into adjacencies including other insurance lines. For example, our acquisition of Safekeep in February 2022 added subrogation solutions that can span insurance lines including automotive, property, and worker's compensation.

We have strong customer relationships in the end-markets we serve, and these relationships are a key component of our success given the long-term nature of our contracts and the interconnectedness of our network. We have customer agreements with more than 300 insurers (including carriers, self-insurers and other entities processing insurance claims), including 18 of the top 20 automotive insurance carriers in the U.S., based on DWP, and hundreds of regional carriers. We have more than ~~30,000~~35,000 total customers, including over ~~27,500~~29,000 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), thousands of automotive dealers, 13 of the top 15 automotive manufacturers, based on new vehicle sales, and numerous other companies that participate in the P&C insurance economy.

Key Performance Measures and Operating Metrics

In addition to our GAAP and non-GAAP financial measures, we rely on Software Net Dollar Retention Rate (“Software NDR”) and Software Gross Dollar Retention Rate (“Software GDR”) to measure and evaluate our business to make strategic decisions. Software NDR and Software GDR may not be comparable to or calculated in the same way as other similarly titled measures used by other companies.

Software NDR

We believe that Software NDR provides our management and our investors with insight into our ability to retain and grow revenue from our existing customers, as well as their potential long-term value to us. We also believe the results shown by this metric reflect the stability of our revenue base, which is one of our core competitive strengths. We calculate Software NDR by dividing (a) annualized software revenue recorded in the last month of the measurement period, for example, March for a quarter ending March 31, for unique billing accounts that generated revenue during the corresponding month of the prior year by (b) annualized software revenue as of the corresponding month of the prior year. The calculation includes changes for these billing accounts, such as change in the solutions purchased, changes in pricing and transaction volume, but does not reflect revenue for new customers added. The calculation excludes: (a) changes in estimates related to the timing of one-time revenue and other revenue, including professional services, and (b) annualized software revenue for smaller customers with annualized software revenue below the threshold of $100,000 for carriers and $4,000 for shops. The customers that do not meet the revenue threshold are small carriers and shops that tend to have different buying behaviors, with a narrower solution focus, and different tenure compared to our core customers (excluded small carriers and shops represent less than 5% of total revenue within these sales channels). Our Software NDR includes carriers and shops who subscribe to our auto physical damage solutions, which account for most of the Company’s revenue, and excludes revenue from ~~diagnostic providers,~~ smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and also excludes CCC ~~Casualty~~casualty solutions which are largely usage and professional service ~~based solutions.~~based.

Quarter Ending

2022

2021
Software NDR

March 31

114%

106%

June 30

111%

110%

September 30

110%

113%

December 31

115%


	Quarter Ending	2023	2022
Software NDR	March 31	106%	114%
	June 30	107%	111%
	September 30		110%
	December 31		106%

Software GDR

We believe that Software GDR provides our management and our investors with insight into the value our solutions provide to our customers as represented by our ability to retain our existing customer base. We believe the results shown by this metric reflect the strength and stability of our revenue base, which is one of our core competitive strengths. We calculate Software GDR by dividing (a) annualized software revenue recorded in the last month of the measurement period in the prior year, reduced by annualized software

revenue for unique billing accounts that are no longer customers as of the current period end by (b) annualized software revenue as of the corresponding month of the prior year. The calculation reflects only customer losses and does not reflect customer expansion or contraction for these billing accounts and does not reflect revenue for new customer billing accounts added. Our Software GDR calculation represents our annualized software revenue that is retained from the prior year and demonstrates that the vast majority of our customers continue to use our solutions and renew their subscriptions. The calculation excludes: (a) changes in estimates related to

the timing of one-time revenue and other revenue, including professional services, and (b) annualized software revenue for smaller customers with annualized software revenue below the threshold of $100,000 for carriers and $4,000 for shops. The customers that do not meet the revenue threshold are small carriers and shops that tend to have different buying behaviors, with a narrower solution focus, and different tenure compared to our core customers (excluded small carriers and shops which represent less than 5% of total revenue within these sales channels). Our Software GDR includes carriers and shops who subscribe to our auto physical damage solutions, which account for most of the Company’s revenue, and excludes revenue from ~~diagnostic providers,~~ smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and excludes ~~CCC’s~~CCC casualty solutions which are largely usage and professional service ~~based solutions.~~based.

Quarter Ending

2022

2021
Software GDR

March 31

99%

98%

June 30

99%

98%

September 30

99%

98%

December 31

98%


	Quarter Ending	2023	2022
Software GDR	March 31	99%	99%
	June 30	99%	99%
	September 30		99%
	December 31		99%

Results of Operations

Comparison of the three months ended ~~September~~June 30, ~~2022~~2023 to the three months ended ~~September~~June 30, ~~2021~~2022


	Three Months Ended June 30,
(dollar amounts in thousands, except share and per share data)	2023			2022			$			%

Revenues	$	211,710		$	192,786		$	18,924			9.8	%

Cost of revenues, exclusive of amortization and impairment of acquired technologies		52,047			46,095			5,952			12.9	%
Amortization of acquired technologies		6,646			6,750			(104	)		-1.5	%
Impairment of acquired technologies		431			—			431		NM

Cost of revenues(1)		59,124			52,845			6,279			11.9	%

Gross profit		152,586			139,941			12,645			9.0	%
Operating expenses:
Research and development(1)		43,363			38,758			4,605			11.9	%
Selling and marketing(1)		35,936			31,091			4,845			15.6	%
General and administrative(1)		46,141			39,509			6,632			16.8	%
Amortization of intangible assets		18,022			18,066			(44	)		-0.2	%
Impairment of goodwill		77,405			—			77,405		NM
Impairment of intangible assets		4,906			—			4,906		NM

Total operating expenses		225,773			127,424			98,349			77.2	%

Operating (loss) income		(73,187	)		12,517			(85,704	)	NM
Other income (expense):
Interest expense		(14,014	)		(7,944	)		(6,070	)		-76.4	%
Interest income		4,023			—			4,023		NM
Change in fair value of derivative instruments		3,613			—			3,613		NM
Change in fair value of warrant liabilities		(20,375	)		21,004			(41,379	)	NM
Other income, net		315			112			203			181.3	%

Total other income (expense)		(26,438	)		13,172			(39,610	)	NM
(Loss) income before income taxes		(99,625	)		25,689			(125,314	)	NM
Income tax benefit (provision)		2,281			(10,125	)		12,406		NM

Net (loss) income including non-controlling interest		(97,344	)		15,564			(112,908	)	NM

Less: accretion of redeemable non-controlling interest		(315	)		-		-315			NM
Net (loss) income attributable to CCC Intelligent Solutions Holdings Inc. Common Stockholders	$	(97,659	)	$	15,564		$	(113,223	)	NM
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.16	)	$	0.03
Diluted	$	(0.16	)	$	0.02

Weighted-average shares used in computing net (loss) income per share attributable to common stockholders:
Basic		621,235,776			605,948,628
Diluted		621,235,776			639,964,696
NM—Not Meaningful

(1) Includes stock-based compensation expense as follows (in thousands):
	Three Months Ended June 30,
	2023			2022
Cost of revenues	$	2,299		$	1,661
Research and development		6,600			5,530

Three Months Ended September 30,

(dollar amounts in thousands, except share and per share data)

2022

2021

$

%

Revenues

$
198,734

$
176,628

$
22,106

12.5
%
Cost of revenues, exclusive of amortization of
   acquired technologies

46,379

51,273

(4,894
)

-9.5
%
Amortization of acquired technologies

6,748

6,580

168

2.6
%
Cost of revenues(1)

53,127

57,853

(4,726
)

-8.2
%
Gross profit

145,607

118,775

26,832

22.6
%
Operating expenses:

Research and development(1)

40,273

67,016

(26,743
)

-39.9
%
Selling and marketing(1)

30,838

80,382

(49,544
)

-61.6
%
General and administrative(1)

39,376

142,511

(103,135
)

-72.4
%
Amortization of intangible assets

18,066

18,078

(12
)

-0.1
%
Total operating expenses

128,553

307,987

(179,434
)

-58.3
%
Operating income (loss)

17,054

(189,212
)

206,266

NM

Other income (expense):

Interest expense

(10,501
)

(13,878
)

3,377

24.3
%
Change in fair value of derivative instruments

5,991

2,007

3,984

198.5
%
Change in fair value of warrant liabilities

312

(26,889
)

27,201

NM

Loss on early extinguishment of debt

—

(15,240
)

15,240

NM

Gain on sale of cost method investment

9

—

9

NM

Other income (loss), net

382

(93
)

475

NM

Total other income (expense)

(3,807
)

(54,093
)

50,286

93.0
%
Income (loss) before income taxes

13,247

(243,305
)

256,552

NM

Income tax (provision) benefit

(3,452
)

53,523

(56,975
)

NM

Net income (loss)

$
9,795

$
(189,782
)

$
199,577

NM

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

Basic

$
0.02

$
(0.34
)

Diluted

$
0.02

$
(0.34
)

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

Basic

609,421,073

566,454,782

Diluted

643,582,922

566,454,782

(1)  Includes stock-based compensation expense as follows (in thousands):

Three Months Ended September 30,

2022

2021

Cost of revenues

$
1,657

$
12,169

Research and development

5,373

35,472

Sales and marketing

6,890

58,770

General and administrative

14,802

113,465

Total stock-based compensation expense

$
28,722

$
219,876

~~NM—Not Meaningful~~


Sales and marketing		8,749		6,611
General and administrative		17,838		14,601
Total stock-based compensation expense	$	35,486	$	28,403

Revenues

~~Revenue~~Revenues increased by ~~$22.1~~$18.9 million to ~~$198.7~~$211.7 million, or ~~12.5%~~9.8%, for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to the three months ended ~~September~~June 30, ~~2021.~~2022. The Company's software subscription revenues accounted for ~~$191.2~~$202.9 million and ~~$170.0~~$185.5 million, or 96% and 96%, of total revenue during the three months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

The increase in revenue was primarily a result of ~~10%~~7% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.

Cost of Revenues

Cost of revenues ~~decreased~~increased by ~~$4.7~~$6.3 million to ~~$53.1~~$59.1 million, or ~~8.2%~~11.9%, for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to the three months ended ~~September~~June 30, ~~2021.~~2022.

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

Cost of revenues, exclusive of amortization and impairment of acquired technologies, ~~decreased~~increased by ~~$4.9~~$6.0 million to ~~$46.4~~$52.0 million, or ~~9.5%~~12.9%, for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to the three months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase was primarily due to a $10.5 million reduction in stock-based compensation, mainly from the vesting term modification completed in conjunction with the Business Combination in the prior year, partially offset by a $1.1 million increase in personnel-related costs, a $2.2 million increase in third party license and royalty fees, a $1.6$2.3 million increase in depreciation expense related to additional investments in platform and infrastructure enhancements, ~~and~~ a ~~$0.5~~$1.5 million increase in ~~consulting~~personnel-related costs, including stock-based compensation, a $1.1 million increase in information technology ("IT") related costs and ~~other professional service costs.~~a $0.8 million increase in third party fees and direct costs associated with our revenue growth.

Amortization of Acquired Technologies

Amortization of acquired technologies was ~~$6.7~~$6.6 million and $6.8 million for the three months ended ~~September~~June 30, 2023 and 2022, ~~compared to $6.6~~respectively.

Impairment of Acquired Technologies

Impairment of acquired technologies was $0.4 million for the three months ended ~~September~~June 30, ~~2021.~~2023 due to an impairment charge recognized as a result of a downward revision of projected earnings and cash flows of our China reporting unit. There was no impairment charge recognized during the three months ended June 30, 2022.

Gross Profit

Gross profit increased by ~~$26.8~~$12.6 million to ~~$145.6~~$152.6 million, or ~~22.6%~~9.0%, for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to the three months ended ~~September~~June 30, ~~2021.~~2022. Our gross profit margin was ~~73.3%~~72.1% for the three months ended ~~September~~June 30, ~~2022~~2023, compared to ~~67.2%~~72.6% for the three months ended ~~September~~June 30, ~~2021.~~2022. The increase in gross profit was due to ~~a reduction in stock-based compensation,~~ increased software subscription revenues and economies of scale resulting from fixed cost ~~arrangements.~~arrangements, partially offset by the increase in depreciation expense related to additional investments in platform and infrastructure enhancements.

Research and Development

Research and development expense ~~decreased~~increased by ~~$26.7~~$4.6 million to ~~$40.3~~$43.4 million, or ~~39.9%~~11.9%, for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to the three months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase was primarily due to a ~~reduction of $30.1~~$3.1 million increase in consulting and other professional service costs, a $3.1 million increase in IT related costs and a $0.9 million increase in personnel-related costs, including stock-based compensation, ~~mainly from the vesting term modification completed in conjunction with the Business Combination in the prior year and~~partially offset by a ~~$4.3~~$2.5 million increase in the amount of capitalized time on ~~development projects, partially offset by a $6.8 million increase in resource costs.~~platform and infrastructure enhancements.

Selling and Marketing

Selling and marketing expense ~~decreased~~increased by ~~$49.5~~$4.8 million to ~~$30.8~~$35.9 million, or ~~61.6%~~15.6%, for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to the three months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase was primarily due to a ~~reduction of $51.9 million in stock-based compensation, mainly from the vesting term modification completed in conjunction with the Business Combination in the prior year, partially offset by a $2.1~~$4.2 million increase in personnel-related costs, including stock-based compensation and sales incentives and a $0.5 million increase in travel costs.

General and Administrative

General and administrative expense ~~decreased~~increased by ~~$103.1~~$6.6 million to ~~$39.4~~$46.1 million, or ~~72.4%~~16.8%, for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to the three months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase was primarily due to a ~~reduction of $98.7~~$4.1 million increase in personnel-related costs, including a $3.2 million increase in stock-based compensation, ~~mainly from the vesting term modification completed~~a $1.3 million increase in ~~conjunction with the Business Combination~~legal and other professional service costs, a $0.6 million increase in ~~the prior year,~~IT related costs and a ~~$1.6~~$0.4 million ~~decrease~~increase in the Company's facilities ~~costs due to the closure of the Company's previous headquarters in March 2022 and a $0.8 million decrease in consulting and other professional service~~ costs.

Amortization of Intangible Assets

Amortization of intangible assets was $18.0 million and $18.1 million for the three months ended ~~September~~June 30, 2023 and 2022, ~~and 2021.~~respectively.

34Impairment of Goodwill and Intangible Assets

We recorded impairment charges of goodwill and intangible assets of $77.4 million and $4.9 million, respectively, for the three months ended June 30, 2023. The impairment charges were the result of lower forecasted earnings and cash flows for the Company’s China reporting unit. There was no impairment charge recognized during the three months ended June 30, 2022. See Note 11 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Interest Expense

Interest expense ~~decreased~~increased by ~~$3.4~~$6.0 million to ~~$10.5~~$14.0 million, or ~~24.3%~~76.4%, for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to the three months ended ~~September~~June 30, ~~2021,~~2022, due to ~~less outstanding long-term debt, partially offset by~~ higher variable interest rates during the three months ended ~~September~~June 30, 2023.

Interest Income

Interest income was $4.0 million for the three months ended June 30, 2023. The interest income was due to interest earned on our cash balances. We did not recognize any interest income for the three months ended June 30, 2022.

Change in Fair Value of Derivative Instruments

~~Change in fair value~~We recognized income of ~~derivative instruments was $6.0~~$3.6 million for the three months ended September 30, 2022, compared to $2.0 million for the three months ended September 30, 2021. The $6.0 million change in fair value recognized for the three months ended September 30, 2022 is related to the interest rate cap agreement entered into in August 2022 and driven by the increase in the forward yield curve since the inception of the agreement. The $2.0 millionfrom a change in fair value of derivative instruments for the three months ended ~~September~~June 30, ~~2021~~2023. The change in fair value recognized for the three months ended June 30, 2023 is related to the interest rate ~~swap~~cap agreements entered into in ~~effect~~August 2022 and driven by the changes in the forward yield curve during the ~~prior year. The interest rate swap agreements were extinguished in September 2021.~~period.

Change in Fair Value of Warrant Liabilities

We recognized ~~income~~a loss of ~~$0.3~~$20.4 million from a change in fair value of warrant liabilities for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~expense~~income of ~~$26.9~~$21.0 million for the three months ended ~~September~~June 30, ~~2021.~~2022. The ~~income recognized for the three months ended September 30, 2022 was due to the decrease~~change in ~~the estimated~~ fair value of ~~the Private Warrants,~~warrant liabilities during each period was primarily ~~from~~due to changes in the ~~lower~~ price of the Company's common stock as of September 30, 2022, compared to June 30, 2022. The expense for the three months ended September 30, 2021 was due to the increase in the estimated fair value of the Public Warrants and Private Warrants.

~~Loss on Early Extinguishment of Debt~~

~~There was no loss on early extinguishment of debt~~ during the three months ended September 30, 2022. Loss on early extinguishment of debt for the three months ended September 30, 2021 was $15.2 million due to the early repayments of the total balance outstanding under the Company's First Lien Term Loan.each respective period.

Income Tax Benefit (Provision) ~~Benefit~~

Income tax ~~provision~~benefit was ~~$3.5~~$2.3 million for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~a benefit~~an income tax provision of ~~$53.5~~$10.1 million for the three months ended ~~September~~June 30, ~~2021.~~2022. The income tax ~~provision was due to the Company having pretax income~~benefit during the three months ended ~~September~~June 30, ~~2022 compared~~2023 was due to ~~a pretax loss during~~ the ~~three months ended September 30, 2021.~~tax benefits from discrete items related to share-based compensation expense, the tax benefit related to the impairment of certain intangible assets, as well as the tax benefit associated with the re-measurement of the Company's deferred tax liability for changes in state tax rates being greater than the tax expense related to pre-tax income.

Comparison of the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 to the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

3534

Nine Months Ended September 30,

(dollar amounts in thousands, except share and per share data)

2022

2021

$

%

Revenue

$
578,342

$
501,205

$
77,137

15.4
%
Cost of revenue, exclusive of amortization of
   acquired technologies

135,174

128,218

6,956

5.4
%
Amortization of acquired technologies

20,193

19,740

453

2.3
%
Cost of revenues(1)

155,367

147,958

7,409

5.0
%
Gross profit

422,975

353,247

69,728

19.7
%
Operating expenses:

Research and development(1)

114,711

128,894

(14,183
)

-11.0
%
Selling and marketing(1)

88,731

121,350

(32,619
)

-26.9
%
General and administrative(1)

123,093

208,745

(85,652
)

-41.0
%
Amortization of intangible assets

54,212

54,232

(20
)

0.0
%
Total operating expenses

380,747

513,221

(132,474
)

-25.8
%
Operating income (loss)

42,228

(159,974
)

202,202

NM

Other income (expense):

Interest expense

(25,786
)

(51,548
)

25,762

50.0
%
Change in fair value of derivative instruments

5,991

8,373

(2,382
)

-28.4
%
Change in fair value of warrant liabilities

23,452

(26,889
)

50,341

NM

Loss on early extinguishment of debt

—

(15,240
)

15,240

NM

Gain on sale of cost method investment

3,587

—

3,587

NM

Other income, net

576

1

575

NM

Total other income (expense)

7,820

(85,303
)

93,123

NM

Income (loss) before income taxes

50,048

(245,277
)

295,325

NM

Income tax (provision) benefit

(12,714
)

54,227

(66,941
)

NM

Net income (loss)

$
37,334

$
(191,050
)

$
228,384

NM

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

Basic

$
0.06

$
(0.36
)

Diluted

$
0.06

$
(0.36
)

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

Basic

606,181,316

525,877,533

Diluted

642,208,622

525,877,533

(1)  Includes stock-based compensation expense as follows (in thousands):

Nine Months Ended September 30,

2022

2021

Cost of revenues

$
4,167

$
12,563

Research and development

14,433

36,748

Sales and marketing

18,331

60,060

General and administrative

43,838

126,042

Total stock-based compensation expense

$
80,769

$
235,413


	Six Months Ended June 30,
(dollar amounts in thousands, except share and per share data)	2023			2022			$			%
Revenue	$	416,630		$	379,609		$	37,021			9.8	%
Cost of revenue, exclusive of amortization and impairment of acquired technologies		102,494			88,795			13,699			15.4	%
Amortization of acquired technologies		13,331			13,445			(114	)		-0.8	%
Impairment of acquired technologies		431			—			431		NM
Cost of revenues(1)		116,256			102,240			14,016			13.7	%
Gross profit		300,374			277,369			23,005			8.3	%
Operating expenses:
Research and development(1)		84,359			74,438			9,921			13.3	%
Selling and marketing(1)		69,467			57,894			11,573			20.0	%
General and administrative(1)		88,006			83,717			4,289			5.1	%
Amortization of intangible assets		36,088			36,146			(58	)		-0.2	%
Impairment of goodwill		77,405			—			77,405		NM
Impairment of intangible assets		4,906			—			4,906		NM
Total operating expenses		360,231			252,195			108,036			42.8	%
Operating (loss) income		(59,857	)		25,174			(85,031	)	NM
Other income (expense):
Interest expense		(27,846	)		(15,285	)		(12,561	)		-82.2	%
Interest income		7,282			—			7,282		NM
Change in fair value of derivative instruments		1,009			—			1,009		NM
Change in fair value of warrant liabilities		(19,180	)		23,140			(42,320	)	NM
Gain on sale of cost method investment		—			3,578			(3,578	)	NM
Other income, net		368			194			174			89.7	%
Total other income (expense)		(38,367	)		11,627			(49,994	)	NM
(Loss) income before income taxes		(98,224	)		36,801			(135,025	)	NM
Income tax benefit (provision)		3,064			(9,262	)		12,326		NM
Net (loss) income including non-controlling interest		(95,160	)		27,539			(122,699	)	NM
Less: accretion of redeemable non-controlling interest		(315	)		—			(315	)	NM
Net (loss) income attributable to CCC Intelligent Solutions Holdings Inc. Common Stockholders	$	(95,475	)	$	27,539		$	(123,014	)	NM
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.15	)	$	0.05
Diluted	$	(0.15	)	$	0.04
Weighted-average shares used in computing net (loss) income per share attributable to common stockholders:
Basic		618,740,340			604,534,589
Diluted		618,740,340			640,650,297

(1) Includes stock-based compensation expense as follows (in thousands):
	Six Months Ended June 30,
	2023			2022
Cost of revenues	$	4,199		$	2,510
Research and development		12,475			9,060
Sales and marketing		16,008			11,441
General and administrative		32,038			29,036
Total stock-based compensation expense	$	64,720		$	52,047

NM—Not Meaningful

Revenues

~~Revenue~~Revenues increased by ~~$77.1~~$37.0 million to ~~$578.3~~$416.6 million, or ~~15.4%~~9.8%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The Company's software subscription revenues accounted for ~~$556.5~~$399.1 million and ~~$481.8~~$365.3 million, or 96% ~~and 96%,~~ of total revenue during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021, respectively.~~2022.

The increase in revenue was primarily a result of ~~12%~~7% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.

Cost of Revenues

Cost of revenues increased by ~~$7.4~~$14.0 million to ~~$155.4~~$116.3 million, or ~~5.0%~~13.7%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

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

Cost of revenues, exclusive of amortization and impairment of acquired technologies, increased by ~~$7.0~~$13.7 million to ~~$135.2~~$102.5 million, or ~~5.4%~~15.4%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The increase was primarily due to a ~~$6.1 million increase in third party license and royalty fees, a $3.3~~$5.5 million increase in depreciation expense related to additional investments in platform and infrastructure enhancements, a ~~$2.6 million increase in consulting and other professional service costs and a $3.9~~$4.3 million increase in personnel-related costs, ~~partially offset by a $8.4 million reduction in~~including stock-based compensation, ~~mainly from the vesting term modification completed~~a $2.0 million increase in ~~conjunction~~IT related costs and a $1.5 million increase in third party fees and direct costs associated with ~~the Business Combination in the prior year.~~our revenue growth.

Amortization of Acquired Technologies

Amortization of acquired technologies was ~~$20.2~~$13.3 million and 13.4 million for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~compared to $19.7~~respectively.

Impairment of Acquired Technologies

Impairment of acquired technologies was $0.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2023 due to an impairment charge recognized as a result of a downward revision of projected earnings and cash flows of our China reporting unit. There was no impairment charge recognized during the six months ended June 30, 2022.

Gross Profit

Gross profit increased by ~~$69.7~~$23.0 million to ~~$423.0~~$300.4 million, or ~~19.7%~~8.3%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Our gross profit margin ~~increased~~was 72.1% for the six months ended June 30, 2023, compared to 73.1% for the ~~nine~~six months ended ~~September~~June 30, ~~2022 compared to 70.5% for the nine months ended September 30, 2021.~~2022. The increase in ~~both~~ gross profit ~~and gross profit margin~~ was ~~primarily~~ due to ~~a reduction in stock-based compensation,~~ increased software subscription revenues and economies of scale resulting from fixed cost ~~arrangements.~~arrangements, partially offset by the increase in depreciation expense related to additional investments in platform and infrastructure enhancements.

Research and Development

Research and development expense ~~decreased~~increased by ~~$14.2~~$9.9 million to ~~$114.7~~$84.4 million, or ~~11.0%~~13.3%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase was primarily due to a ~~$22.3~~$6.7 million ~~reduction~~increase in personnel-related costs, including stock-based compensation, ~~mainly from the vesting term modification completed~~a $6.6 million increase in ~~conjunction with the Business Combination in the prior year~~consulting and other professional service costs and a ~~$12.0~~$4.2 million increase in IT related costs, partially offset by a $7.4 million increase in the amount of capitalized time on ~~development projects, partially offset by a $17.5 million increase in resource costs~~platform and ~~a $2.1 million increase in information technology related costs.~~infrastructure enhancements.

Selling and Marketing

Selling and marketing expense ~~decreased~~increased by ~~$32.6~~$11.6 million to ~~$88.7~~$69.5 million, or ~~26.9%~~20.0%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase was primarily due to a ~~$41.7 million reduction in stock-based compensation, mainly from the vesting term modification completed in conjunction with the Business Combination in the prior year, partially offset by a $6.7~~$9.8 million increase ofin personnel-related costs, including stock-based compensation and sales incentives and ~~travel costs and~~ a ~~$1.1~~$1.0 million increase in ~~marketing and event costs mainly due to the Company's annual Industry Conference, held in person in 2022 while held virtually in 2021.~~travel costs.

General and Administrative

General and administrative expense ~~decreased~~increased by ~~$85.7~~$4.3 million to ~~$123.1~~$88.0 million, or ~~41.0%~~5.1%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~increase was primarily due to a ~~$82.2~~$5.2 million ~~reduction~~increase in personnel-related costs, including stock-based compensation ~~mainly from the vesting term modification completed~~and a $0.5 million increase in ~~conjunction with the Business Combination in the prior year, a $4.5 million decrease in consulting~~legal and other professional service costs, ~~and~~partially offset by a ~~$3.9~~$0.9 million decrease in in the Company's facilities costs and a $0.8 million loss on disposal recognized during the six months ended June 30, 2022 due to the ~~Company's~~ closure of ~~its~~the Company's previous headquarters in March ~~2022, partially offset by a $3.8 million increase in insurance costs.~~2022.

Amortization of Intangible Assets

Amortization of intangible assets was ~~$54.2~~$36.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.

37Impairment of Goodwill and Intangible Assets

We recorded impairment charges of goodwill and intangible assets of $77.4 million and $4.9 million, respectively, for the six months ended June 30, 2023. The impairment charges were the result of lower forecasted earnings and cash flows for the Company’s China reporting unit. There was no impairment charge recognized during the six months ended June 30, 2022. See Note 11 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Interest Expense

Interest expense ~~decreased~~increased by ~~$25.8~~$12.6 million to ~~$25.8~~$27.8 million, or ~~50.0%~~82.2%, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021 primarily~~2022, due to ~~less outstanding long-term debt and a lower~~higher variable interest ~~rate~~rates during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023.

Interest Income

Interest income was $7.3 million for the six months ended June 30, 2023. The interest income was due to interest earned on our cash balances. We did not recognize any interest income for the six months ended June 30, 2022.

Change in Fair Value of Derivative Instruments

~~The~~We recognized income of $1.0 million from a change in fair value of derivative instruments ~~was $6.0 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2022, compared to $8.4 million for the nine months ended September 30, 2021.~~2023. The ~~$6.0 million~~ change in fair value recognized for the ~~nine~~six months ended ~~September~~June 30, ~~2022 was~~2023 is related to the interest rate cap ~~agreement the Company~~agreements entered into in August 2022 and driven by the proximity of the maturity date and changes in the forward yield ~~curve. The $8.4 million change in fair value of derivative instruments in the prior year was related to the interest rate swap agreements in effect~~curve during the ~~prior year. The interest rate swap agreements were extinguished in September 2021.~~period.

Change in Fair Value of Warrant Liabilities

We recognized ~~income~~expense of ~~$23.5~~$19.2 million from a change in fair value of warrant liabilities for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~expense~~income of ~~$26.9~~$23.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~income from the~~ change in fair value of warrant liabilities during each period was primarily due to ~~the decrease~~changes in the ~~estimated fair value of the Private Warrants, primarily from the lower~~ price of the Company's common stock as of September 30, 2022, compared to December 31, 2021. The expense for the nine months ended September 30, 2021 was due to the increase in the estimated fair value of the Public Warrants and Private Warrants.

~~Loss on Early Extinguishment of Debt~~

~~There was no loss on early extinguishment of debt~~ during the nine months ended September 30, 2022. Loss on early extinguishment of debt for the nine months ended September 30, 2021 was $15.2 million due to the early repayments of the total balance outstanding under the Company's First Lien Term Loan.

~~Gain on Sale of Cost Method Investment~~

Gain on sale of cost method investment was $3.6 million for the nine months ended September 30, 2022. The gain recognized was due to the $3.9 million payment received in exchange for its equity interest in an investee as a result of the acquisition of the investee. The Company did not recognize any gain or loss on sale of cost method investment during the nine months ended September 30, 2021.

~~Income Tax (Provision) Benefit~~each respective period.

Income Tax Benefit (Provision)

Income tax ~~provision~~benefit was ~~$12.7~~$3.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to an income tax ~~benefit~~provision of ~~$54.2~~$9.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The income tax ~~provision~~benefit during the six months ended June 30, 2023 was due to the ~~Company having pretax income during~~tax benefits from discrete items related to share-based compensation expense, the ~~nine months ended September 30, 2022, compared~~tax benefit related to ~~a pretax loss during~~ the ~~nine months ended September 30, 2021.~~impairment of certain intangible assets, as well as the tax benefit associated with the re-measurement of the Company's deferred tax liability for changes in state tax rates being greater than the tax expense related to pre-tax income.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe that Adjusted Gross Profit, Adjusted Operating Expenses, Adjusted Operating Income, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share, and Free Cash Flow which are each non-GAAP measures, are useful in evaluating our operational performance. We use this non-GAAP financial information to evaluate our ongoing operations and for internal planning, budgeting and forecasting purposes and setting management bonus programs. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance and comparing our performance with competitors and other comparable companies, which may present similar non-GAAP financial measures to investors. Our computation of these non-GAAP measures may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate these measures in the same fashion. We endeavor to compensate for the limitation of the non-GAAP measure presented by also providing the most directly comparable GAAP measure and a description of the reconciling items and adjustments to derive the non-GAAP measure. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures on a supplemental basis.

Adjusted Gross Profit

We believe that Adjusted Gross Profit, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Gross Profit is defined as gross profit, adjusted for amortization and impairment of acquired technologies ~~business combination transaction costs~~ and stock-based compensation and related employer payroll tax, which are not indicative of our recurring core business operating results. Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by Revenue.

The following table reconciles Gross Profit to Adjusted Gross Profit for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(amounts in thousands, except percentages)	2022			2021			2022			2021			2023			2022			2023			2022
Gross Profit	$	145,607		$	118,775		$	422,975		$	353,247		$	152,586		$	139,941		$	300,374		$	277,369
Amortization of acquired technologies		6,748			6,580			20,193			19,740			6,646			6,750			13,331			13,445
Business combination transaction costs		—			905			—			905
Impairment of acquired technologies														431			—			431			—
Stock-based compensation and related employer payroll tax		1,765			12,169			4,378			12,563			2,358			1,680			4,473			2,613
Adjusted Gross Profit	$	154,120		$	138,429		$	447,546		$	386,455		$	162,021		$	148,371		$	318,609		$	293,427
Gross Profit Margin		73	%		67	%		73	%		70	%		72	%		73	%		72	%		73	%
Adjusted Gross Profit Margin		78	%		78	%		77	%		77	%		77	%		77	%		76	%		77	%

Adjusted Operating Expenses

We believe that Adjusted Operating Expenses, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Expenses is defined as operating expenses adjusted for amortization, impairment charges, stock-based compensation expense and related employer payroll tax, ~~business combination transaction~~plaintiff litigation costs, ~~lease abandonment charges,~~merger and acquisition ("M&A") and integration costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, lease abandonment charges, Business Combination transaction costs and net ~~income (costs)~~costs related to ~~divestiture and merger and acquisition ("M&A") and integration costs.~~divestiture.

The following table reconciles operating expenses to Adjusted Operating Expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(dollar amounts in thousands)	2022			2021			2022			2021			2023			2022			2023			2022
Operating expenses	$	128,553		$	307,987		$	380,747		$	513,221		$	225,773		$	127,424		$	360,231		$	252,195
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	)		—
Stock-based compensation expense and related employer payroll tax		(27,800	)		(207,707	)		(78,496	)		(222,850	)		(33,706	)		(26,973	)		(62,799	)		(50,695	)
Plaintiff litigation costs														(1,537	)		—			(2,523	)		—
M&A and integration costs														—			(348	)		—			(1,756	)
Lease overlap costs														—			—			—			(1,222	)
Lease abandonment		—			(438	)		(1,222	)		(2,256	)		—			—			—			(1,338	)
Lease overlap costs		—			(924	)		(1,338	)		(2,773	)
Net income (costs) related to divestiture		471			(338	)		418			(2,605	)
Business combination transaction and related costs		(101	)		(5,516	)		(1,156	)		(10,471	)
M&A and integration costs		(6	)		—			(1,761	)		—
Amortization of intangible assets		(18,066	)		(18,078	)		(54,212	)		(54,232	)
Business Combination transaction and related costs														—			(324	)		—			(1,056	)
Net costs related to divestiture														—			6			—			(53	)
Adjusted operating expenses	$	83,051		$	74,986		$	242,980		$	218,034		$	90,197		$	81,719		$	176,510		$	159,929

Adjusted Operating Income

We believe that Adjusted Operating Income, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Income is defined as operating (loss) income ~~(loss)~~ adjusted for amortization, impairment charges, stock-based compensation expense and related employer payroll tax, ~~business combination transaction~~plaintiff litigation costs, ~~lease abandonment charges,~~M&A and integration costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, lease abandonment charges, Business Combination transaction costs and net ~~(income)~~ costs related to ~~divestiture and M&A and integration costs.~~divestiture.

3938

The following table reconciles operating (loss) income ~~(loss)~~ to Adjusted Operating Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended September 30,						Nine Months Ended September 30,
													Three Months Ended June 30,						Six Months Ended June 30,
(dollar amounts in thousands)	2022			2021			2022			2021			2023			2022			2023			2022
Operating income (loss)	$	17,054		$	(189,212	)	$	42,228		$	(159,974	)
Stock-based compensation expense and related employer payroll tax		29,565			219,876			82,874			235,413
Lease abandonment		—			438			1,222			2,256
Lease overlap costs		—			924			1,338			2,773
Net (income) costs related to divestiture		(471	)		338			(418	)		2,605
Business combination transaction and related costs		101			5,516			1,156			10,471
M&A and integration costs		6			—			1,761			—
Operating (loss) income													$	(73,187	)	$	12,517		$	(59,857	)	$	25,174
Amortization of intangible assets		18,066			18,078			54,212			54,232			18,022			18,066			36,088			36,146
Amortization of acquired technologies—Cost of revenue		6,748			6,580			20,193			19,740			6,646			6,750			13,331			13,445
Impairment of acquired technologies—Cost of revenue														431			—			431			—
Impairment of goodwill														77,405			—			77,405			—
Impairment of intangible assets														4,906			—			4,906			—
Stock-based compensation expense and related employer payroll tax														36,064			28,653			67,272			53,308
Plaintiff litigation costs														1,537			—			2,523			—
M&A and integration costs														—			348			—			1,756
Lease overlap costs														—			—			—			1,222
Lease abandonment														—			—			—			1,338
Business Combination transaction and related costs														—			324			—			1,056
Net costs related to divestiture														—			(6	)		—			53
Adjusted operating income	$	71,069		$	62,538		$	204,566		$	167,516		$	71,824		$	66,652		$	142,099		$	133,498

Adjusted EBITDA

We believe that Adjusted EBITDA, as defined below, is useful in evaluating our operational performance distinct and apart from financing costs, certain expenses and non-operational expenses. Adjusted EBITDA is defined as net (loss) income ~~(loss)~~ adjusted for interest, taxes, amortization, depreciation, ~~amortization, change in fair value of derivative instruments, change in fair value of warrant liabilities,~~impairment charges, stock-based compensation expense and related employer payroll tax, ~~loss on early extinguishment~~change in fair value of ~~debt, business combination transaction~~derivative instruments, plaintiff litigation costs, ~~lease abandonment charges,~~change in fair value of warrant liabilities, M&A and integration costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, lease abandonment charges, Business Combination transaction costs, net ~~(income)~~ costs related to divestiture ~~M&A and integration costs~~ and gain on sale of cost method investment. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.

The following table reconciles net (loss) income ~~(loss)~~ to Adjusted EBITDA for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:

Three Months Ended September 30,

Nine Months Ended September 30,

(dollar amounts in thousands)

2022

2021

2022

2021

Net income (loss)

$
9,795

$
(189,782
)

$
37,334

$
(191,050
)
Interest expense

10,501

13,878

25,786

51,548

Income tax provision (benefit)

3,452

(53,523
)

12,714

(54,227
)
Amortization of intangible assets

18,066

18,078

54,212

54,232

Amortization of acquired technologies—Cost of
   revenue

6,748

6,580

20,193

19,740

Depreciation and amortization of software,
   equipment and property

6,665

7,694

20,155

18,161

EBITDA

55,227

(197,075
)

170,394

(101,596
)
Change in fair value of derivative
   instruments

(5,991
)

(2,007
)

(5,991
)

(8,373
)
Change in fair value of warrant liabilities

(312
)

26,889

(23,452
)

26,889

Loss on early extinguishment of debt

—

15,240

—

15,240

Stock-based compensation expense and related employer
   payroll tax

29,565

219,876

82,874

235,413

Business combination transaction and related costs

101

5,516

1,156

10,471

Lease abandonment

—

438

1,338

2,256

Lease overlap costs

—

924

1,222

2,773

Net (income) costs related to divestiture

(471
)

338

(418
)

2,605

M&A and integration costs

6

—

1,761

—

Gain on sale of cost method investment

(9
)

—

(3,587
)

—

Adjusted EBITDA

$
78,116

$
70,139

$
225,297

$
185,678

Adjusted EBITDA Margin

39.3
%

39.7
%

39.0
%

37.0
%


	Three Months Ended June 30,						Six Months Ended June 30,
(dollar amounts in thousands)	2023			2022			2023			2022
Net (loss) income	$	(97,344	)	$	15,564		$	(95,160	)	$	27,539
Interest expense		14,014			7,944			27,846			15,285
Interest income		(4,023	)		—			(7,282	)		—
Income tax (benefit) provision		(2,281	)		10,125			(3,064	)		9,262
Amortization of intangible assets		18,022			18,066			36,088			36,146
Amortization of acquired technologies—Cost of revenue		6,646			6,750			13,331			13,445
Depreciation and amortization of software, equipment and property		2,187			2,444			4,414			5,407
Depreciation and amortization of software, equipment and property—Cost of revenue		6,573			4,239			13,552			8,083
EBITDA		(56,206	)		65,132			(10,275	)		115,167
Stock-based compensation expense and related employer payroll tax		36,064			28,653			67,272			53,308
Impairment of acquired technologies—Cost of revenue		431			—			431			—
Impairment of goodwill		77,405			—			77,405			—
Impairment of intangible assets		4,906			—			4,906			—
Change in fair value of derivative instruments		(3,613	)		—			(1,009	)		—
Plaintiff litigation costs		1,537			—			2,523			—
Change in fair value of warrant liabilities		20,375			(21,004	)		19,180			(23,140	)
M&A and integration costs		—			348			—			1,756
Lease overlap costs		—			—			—			1,222
Lease abandonment		—			—			—			1,338
Business Combination transaction and related costs		—			324			—			1,056
Net costs related to divestiture		—			(6	)		—			53
Gain on sale of cost method investment		—			—			—			(3,578	)
Adjusted EBITDA	$	80,899		$	73,447		$	160,433		$	147,182
Adjusted EBITDA Margin		38	%		38	%		39	%		39	%

Adjusted Net Income and Adjusted Earnings Per Share

We believe that Adjusted Net Income, as defined below, and Adjusted Earnings Per Share are useful in evaluating our operational performance distinct and apart from financing costs, certain expenses and non-operational expenses. Adjusted Net Income is defined as net (loss) income ~~(loss)~~ adjusted for the after-tax effects of amortization, ~~change in fair value of derivative instruments, change in fair value of warrant liabilities,~~impairment charges, stock-based compensation expense and related employer payroll tax, ~~loss on early extinguishment~~change in fair value of ~~debt, business combination transaction~~derivative instruments, plaintiff litigation costs, ~~lease abandonment charges,~~change in fair value of warrant liabilities, M&A and integration costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, lease abandonment charges, Business Combination transaction costs, net ~~(income)~~ costs related to divestiture ~~M&A and integration costs~~ and gain on sale of cost method investment.

The following table reconciles net (loss) income ~~(loss)~~ to Adjusted Net Income and Adjusted Earnings per Share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(dollar amounts in thousands)	2022			2021			2022			2021			2023			2022			2023			2022
Net income (loss)	$	9,795		$	(189,782	)	$	37,334		$	(191,050	)
Net (loss) income													$	(97,344	)	$	15,564		$	(95,160	)	$	27,539
Amortization of intangible assets		18,066			18,078			54,212			54,232			18,022			18,066			36,088			36,146
Amortization of acquired technologies— Cost of revenue		6,748			6,580			20,193			19,740
Amortization of acquired technologies—Cost of revenue														6,646			6,750			13,331			13,445
Impairment of acquired technologies—Cost of revenue														431			—			431			—
Impairment of goodwill														77,405			—			77,405			—
Impairment of intangible assets														4,906			—			4,906			—
Stock-based compensation expense and related employer payroll tax														36,064			28,653			67,272			53,308
Change in fair value of derivative instruments		(5,991	)		(2,007	)		(5,991	)		(8,373	)		(3,613	)		—			(1,009	)		—
Plaintiff litigation costs														1,537			—			2,523			—
Change in fair value of warrant liabilities		(312	)		26,889			(23,452	)		26,889			20,375			(21,004	)		19,180			(23,140	)
Loss on early extinguishment of debt		—			15,240			—			15,240
Stock-based compensation expense and related employer payroll tax		29,565			219,876			82,874			235,413
Business combination transaction and related costs		101			5,516			1,156			10,471
M&A and integration costs														—			348			—			1,756
Lease overlap costs														—			—			—			1,222
Lease abandonment		—			438			1,222			2,256			—			—			—			1,338
Lease overlap costs		—			924			1,338			2,773
Net (income) costs related to divestiture		(471	)		338			(418	)		2,605
M&A and integration costs		6			—			1,761			—
Business Combination transaction and related costs														—			324			—			1,056
Net costs related to divestiture														—			(6	)		—			53
Gain on sale of cost method investment		(9	)		—			(3,587	)		—			—			—			—			(3,578	)
Tax effect of adjustments		(10,894	)		(72,360	)		(34,193	)		(89,134	)		(16,587	)		(11,287	)		(30,633	)		(22,867	)
Adjusted net income	$	46,604		$	29,730		$	132,449		$	81,062		$	47,842		$	37,408		$	94,334		$	86,278
Adjusted net income per share attributable to common stockholders:
Basic	$	0.08		$	0.05		$	0.22		$	0.15		$	0.08		$	0.06		$	0.15		$	0.14
Diluted	$	0.07		$	0.05		$	0.21		$	0.15		$	0.07		$	0.06		$	0.15		$	0.13
Weighted average shares outstanding:
Basic		609,421,073			566,454,782			606,181,316			525,877,533			621,235,776			605,948,628			618,740,340			604,534,589
Diluted		643,582,922			599,675,416			642,208,622			554,818,300			651,427,506			639,964,696			648,887,781			640,650,297

Free Cash Flow

We believe that Free Cash Flow, as defined below, provides meaningful supplemental information regarding our ability to generate cash and fund our operations and capital expenditures. Free Cash Flow is defined as net cash provided by operating activities less cash used for the purchases of software, equipment, and ~~property, and purchase of intangible assets.~~property.

The following table reconciles net cash provided by operating activities to Free Cash Flow for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:

Three Months Ended September 30,

Nine Months Ended September 30,

(dollar amounts in thousands)

2022

2021

2022

2021

Net cash provided by operating activities

$
30,753

$
36,905

$
118,438

$
96,725

Less: Purchases of software, equipment, and property

(13,375
)

(11,864
)

(38,844
)

(25,022
)
Less: Purchase of intangible assets

—

—

—

(49
)
Free Cash Flow

$
17,378

$
25,041

$
79,594

$
71,654


	Three Months Ended June 30,						Six Months Ended June 30,
(dollar amounts in thousands)	2023			2022			2023			2022
Net cash provided by operating activities	$	69,554		$	40,820		$	102,632		$	87,685
Less: Purchases of software, equipment, and property		(14,560	)		(11,189	)		(29,084	)		(25,469	)
Free Cash Flow	$	54,994		$	29,631		$	73,548		$	62,216

Liquidity and Capital Resources

We have financed our operations with cash flows from operations. The Company generated ~~$118.4~~$102.6 million of cash flows from operating activities during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. As of ~~September~~June 30, ~~2022,~~2023, the Company had cash and cash equivalents of ~~$248.2~~$403.6 million, a working capital surplus of ~~$252.5~~$416.3 million and an accumulated deficit totaling ~~$ 709.0~~$803.1 million. As of ~~September~~June 30, ~~2022,~~2023, the Company had ~~$794.0~~$788.0 million aggregate principal outstanding on its term loan.

We believe that our existing cash and cash equivalents, our cash flows from operating activities and our borrowing capacity under our 2021 Revolving Credit Facility will be sufficient to fund our operations, fund required long-term debt repayments and meet our commitments for capital expenditures for at least the next twelve months.

Although we are not currently a party to any material definitive agreement regarding potential investments in, or acquisitions of, complementary businesses, applications or technologies, we may enter into these types of arrangements, which could reduce our cash and cash equivalents or require us to seek additional equity or debt financing. Additional funds from financing arrangements may not be available on terms favorable to us or at all.

Debt

On September 21, 2021, CCC Intelligent Solutions Inc., an indirect wholly owned subsidiary of the Company, together with certain of the Company’s subsidiaries acting as guarantors entered into a credit agreement ~~(the "2021 Credit Agreement").~~

~~The 2021 Credit Agreement replaced~~(as amended, the ~~Company’s 2017 First Lien Credit Agreement (the “First Lien~~“2021 Credit Agreement”)~~, dated as of April 27, 2017, as amended as of February 14, 2020.~~.

The proceeds of the 2021 Credit Agreement and cash on hand were used to repay all outstanding borrowings under the ~~First Lien Credit Agreement.~~Company's previous credit agreement.

~~2021 Credit Agreement~~—The 2021 Credit Agreement consists of ~~the~~an $800.0 million term loan ("Term B ~~Loan~~Loan") and ~~2021 Revolving Credit Facility~~a revolving credit facility for an aggregate principal amount of $250.0 ~~million.~~million (the "2021 Revolving Credit Facility" and together with the Term B Loan, the "2021 Credit Facilities"). The 2021 Revolving Credit Facility has a sublimit of $75.0 million for letters of credit. The Company received proceeds of $798.0 million, net of debt discount of $2.0 million, related to the Term B Loan.

~~Beginning with the quarter ending March 31, 2022, the~~The Term B Loan requires quarterly principal payments of $2.0 million until June 30, 2028, with the remaining outstanding principal amount required to be paid on the maturity date, September 21, 2028.

Beginning with the fiscal year ~~ending~~ended December 31, 2022, if the Company's leverage ratio, as defined in the 2021 Credit Agreement is greater than 3.5, the Term B Loan requires a principal prepayment, ~~of principal,~~ subject to certain exceptions, in connection with the receipt of proceeds from certain asset sales, casualty events, and debt issuances by the Company, and up to 50% of annual excess cash flow, as defined in and as further set forth in the 2021 Credit Agreement. When a principal prepayment is required, the prepayment offsets the future quarterly principal payments of the same amount. As of ~~September 30,~~December 31, 2022, the Company's leverage ratio did not exceed the 3.5 threshold and the Company iswas not subject to the annual excess cash flow calculation and, noas such, was not required to make a principal ~~prepayments are required.~~prepayment.

As of ~~September~~June 30, ~~2022,~~2023, the amount outstanding on the Term B ~~Loans~~Loan was ~~$794.0~~$788.0 million, of which, $8.0 million is classified as current.

On May 19, 2023, the Company entered into Amendment No. 1 to the 2021 Credit Agreement (the “Amendment Credit Agreement”) to establish SOFR as the benchmark rate for determining the applicable interest rate, replacing LIBOR. No other terms, including the amount of borrowings, required payments or maturity date, were changed as a result of the Amendment.

(1)

(2)

A quarterly commitment fee of up to 0.50% is payable on the unused portion of the 2021 Revolving Credit Facility. The 2021 Revolving Credit Facility matures on September 21, 2026.

During the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was ~~4.6%~~7.4% and ~~3.0%~~3.3%, respectively. ~~The~~During the three months ended June 30, 2023 and 2022, the Company made interest payments of ~~$9.2~~$14.6 million ~~during the three months ended September 30, 2022. There were no interest payments made during the three months ended September 30, 2021.~~and $6.6 million, respectively.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was ~~3.6%~~7.1% and ~~3.0%~~3.2%, respectively. ~~The~~During the six months ended June 30, 2023 and 2022, the Company made interest payments of ~~$21.6~~$28.1 million ~~during the nine months ended September 30, 2022. There were no interest payments made during the nine months ended September 30, 2021.~~and $12.5 million, respectively.

The Company has an outstanding standby letter of credit for $0.7 million which reduces the amount available to be borrowed under the 2021 Revolving Credit Facility. As of ~~September~~June 30, ~~2022,~~2023, $249.3 million was available to be borrowed under the 2021 Revolving Credit Facility.

ratio of CCC Intelligent Solutions Inc. and certain of its subsidiaries cannot exceed 6.25 to 1.00. AsBorrowings under the 2021 Revolving Credit Facility did not exceed 35% of ~~September 30, 2022,~~the aggregate commitments and the Company was not subject to the ~~financial covenant.~~

~~First Lien Credit Agreement—In April 2017, the Company entered into the First Lien Credit Agreement.~~

~~The First Lien Credit Agreement initially consisted~~leverage test as of ~~a $1.0 billion term loan and revolving credit facilities for an aggregate principal amount of $100.0 million, with a sublimit of $30.0 million for letters of credit under the First Lien Revolvers.~~

In February 2020, the Company refinanced its long-term debt and entered into the First Amendment to the First Lien Credit Agreement. The First Lien Amendment provided an incremental term loan, amended the amount of commitments and the maturity dates of the First Lien Credit Agreement’s revolving credit facilities.

The First Lien Amendment provided an incremental term loan in the amount of $375.0 million and reduced the amount of commitments under the First Lien Revolvers to an aggregate principal amount of $91.3 million. The First Lien Revolvers continued to have a sublimit of $30.0 million for letters of credit.

The First Lien Term Loan required (after giving effect to the First Lien Amendment) quarterly principal payments of approximately $3.5 million until March 31, 2024, with the remaining outstanding principal amount required to be paid on the maturity date, April 27, 2024. The First Lien Term Loan required a prepayment of principal, subject to certain exceptions, in connection with the receipt of proceeds from certain asset sales, casualty events, and debt issuances by the Company, and up to 50% of annual excess cash flow, as defined in and as further set forth in the First Lien Credit Agreement. When a principal prepayment was required, the prepayment offset the future quarterly principal payments of the same amount. As of December 31, 2020, subject to the request of the lenders of the First Lien Term Loan, a principal prepayment of up to $21.9 million was required. In April 2021, the Company made a principal prepayment of $1.5 million to those lenders who made such a request.

~~The Company made a principal prepayment of $525.0 million on July~~June 30, 2021. Subsequently, in September 2021, using the proceeds from the Term B Loan provided in the 2021 Credit Agreement and cash on hand, the Company fully repaid the remaining $804.2 million of outstanding borrowings on the First Lien Term Loan.

Amounts outstanding under the First Lien Credit Agreement bore interest at a variable rate of LIBOR, plus up to 3.00% per annum based upon the Company’s leverage ratio, as defined in the First Lien Credit Agreement. A quarterly commitment fee of up to 0.50% was payable on the unused portion of the First Lien Revolvers.

During the three months ended September 30, 2021 the weighted-average interest rate on the outstanding borrowings under the First Lien Term Loan was 4.1%. The Company made interest payments of $9.3 million during the three months ended September 30, 2021.

During the nine months ended September 30, 2021 the weighted-average interest rate on the outstanding borrowings under the First Lien Term Loan was 4.1%. The Company made interest payments of $36.1 million during the nine months ended September 30, 2021.2023.

Interest Rate Cap—In August 2022, the Company entered into antwo interest rate cap ~~agreement~~agreements to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt. The aggregate notional value of the interest rate cap agreements is $600.0 million with a cap rate of 4.0% and an expiration date of July 31, 2025.

~~Interest Rate Swaps—In~~During the three months ended June ~~2017,~~30, 2023, the Company ~~entered into three floating to fixed~~transitioned the referenced interest rate ~~swap agreements to reduce its exposure to~~within the ~~variability from future cash flows resulting from~~two interest rate ~~risk related~~cap agreements from LIBOR to ~~its floating rate long-term debt. In September 2021,~~SOFR by terminating the ~~Company made an aggregate payment~~original agreements and simultaneously entering into new agreements. The terms of ~~$10.0 million to extinguish~~ the ~~Swap Agreements which~~new agreements were ~~scheduled to expire in June 2022.~~unchanged except for the referenced interest rate.

Cash Flows

The following table provides a summary of cash flow data for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:

Nine Months Ended September 30,

(dollar amounts in thousands)

2022

2021

Net cash provided by operating activities

$
118,438

$
96,725

Net cash used in investing activities

(67,185
)

(35,299
)
Net cash provided by (used in) financing activities

15,006

(62,917
)
Net effect of exchange rate change

(650
)

(162
)
Change in cash and cash equivalents

$
65,609

$
(1,653
)


	Six Months Ended June 30,
(dollar amounts in thousands)	2023			2022
Net cash provided by operating activities	$	102,632		$	87,685
Net cash used in investing activities		(29,084	)		(53,819	)
Net cash provided by financing activities		6,614			11,511
Net effect of exchange rate change		(373	)		(281	)
Change in cash and cash equivalents	$	79,789		$	45,096

Net cash provided by operating activities was ~~$118.4~~$102.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. Net cash provided by operating activities consists of net ~~income~~loss of ~~$37.3~~$95.2 million, adjusted for ~~$94.8~~$211.5 million of non-cash items, ~~$4.5~~($8.8) million for changes in working capital and ($~~18.2)~~5.0) million for the effect of changes in other operating assets and liabilities. Significant non-cash adjustments include goodwill and intangible asset impairment charges of $82.7, depreciation and amortization of ~~$94.6~~$67.4 million, stock-based compensation expense of ~~$80.8~~$64.7 million, ~~non-cash lease expense~~a change in fair value of ~~$3.1~~warrant liabilities of $19.2 million, ~~deferred income tax benefits of ($53.1),~~ a change in fair value of derivative instruments of ($~~6.0)~~1.0) million, ~~and a change in fair value~~non-cash lease expense of ~~warrant liabilities~~$1.2 million, deferred income tax benefits of ($~~23.5)~~23.8) million. The change in net operating assets and liabilities was primarily a result of a decrease in accrued expenses of $15.0 million due to timing of cash disbursements and employee incentive plan payments, a decrease in accounts payable of $8.5 million due to timing of cash disbursements, and an increase in non-current other assets of $5.2 million due to timing of payments for prepaid and other deferred costs, partially offset by a decrease in accounts receivable of ~~$19.5~~$2.3 million due to timing of receipts of payments from customers and an increase in ~~other assets~~deferred revenue of ~~$18.2~~$4.8 million due to timing of ~~payments for prepaid~~customer receipts and other deferred costs including the $6.3 million interest rate cap premium payment, partially offset by a decrease in other current assets of $12.4 million due to timing of cash receipts of non-trade receivables and timing of payments for other deferred costs.revenue recognition.

Net cash used in investing activities was ~~$67.2~~$29.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. Net cash used in investing activities was due to ~~$38.8 million of~~ capitalized internally developed software projects and purchases of software, equipment, and ~~property and $32.2 million for a business acquisition, partially offset by $3.9 million of proceeds from the sale of a cost method investment.~~property.

Net cash provided by financing activities was ~~$15.0~~$6.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. Net cash provided by financing activities was primarily due to ~~$22.8~~$20.8 million of proceeds from stock option exercises, ~~and $3.2 million of proceeds from shares purchased through the Company's ESPP,~~ partially offset by ~~$6.0 million of principal payments of long-term debt and $5.0~~$11.5 million of tax payments related to the net share settlement of employee equity ~~awards.~~awards and $4.0 million of principal payments of long-term debt.

Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures. Our estimates are based on our historical experience, trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material.

Except as described below, there have been no material changes to our critical accounting estimates as compared to the critical accounting policies and estimates disclosed in our audited consolidated financial statements and notes thereto for the year ended December 31, ~~2021,~~2022, included in our Annual Report on Form 10-K.

Valuation of Goodwill and Intangible Assets

We perform an annual assessment for impairment of goodwill and indefinite-lived intangible assets as of ~~September~~November 30 each fiscal year, or whenever events occur or circumstances indicate that it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is below its carrying value. ~~For the three and nine months ended September 30, 2022 and 2021, our annual impairment analysis performed indicated no impairments of goodwill or changes in carrying values due to impairment.~~

The September 30, 2022 quantitative goodwill impairment test performed primarily uses an income approach based on a number of key estimates and assumptions, including revenue and expense growth factors along with applying a discount rate to the estimated

cash flows. The discount rates are based on the estimated weighted average cost of capital for each reporting unit and may change from year to year. Weighted average cost of capital includes certain assumptions such as market capital structures, market betas, risk-free rates of return and estimated costs of borrowing.

The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment. In estimating the fair value of a reporting unit for the purposes of our annual or periodic impairment analyses, we make estimates and significant judgments about the future cash flows of that reporting unit. Our cash flow forecasts are based on assumptions that represent the highest and best use for our reporting units. Changes in judgment on these assumptions and estimates could result in goodwill impairment charges. We believe that the assumptions and estimates utilized are appropriate based on the information available to management.

We have two reporting units, Domestic and China, for purposes of analyzing goodwill. As a result of ~~September 30, 2022, the annual impairment assessment indicated no impairment for~~adverse macroeconomic impacts due to changes in market conditions and increases in interest rates, which contributed to downward revisions to future projected earnings and cash flows, we performed a quantitative goodwill test of our China reporting ~~unit.~~as of May 31, 2023. As a result of our quantitative impairment test, we determined the fair value of our China reporting was less than its carrying value and we recorded a goodwill impairment charge of $77.4 million during the three months ended June 30, 2023.

We used a quantitative approach to measure the fair value of our China reporting unit using a discounted cash flow approach, which is a Level 3 measurement. The ~~quantitative assessment~~discounted cash flow analysis requires significant judgments, including estimates of future cash flows, which are dependent on internal forecasts and determination of the Company’s weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used for the China reporting unit had an estimated fair value that exceeded its carrying value by approximately 10%. Key financial assumptions utilized to determine the fair value of the reporting unit included revenue growth levels that reflect the rollout of new services and solutions, improving profit margins and a 13.5% discount rate. The reporting unit’s fair value would approximate its carrying value with a 60 basis point increase in the ~~discount rate.~~Company’s analysis was 12.5%.

~~As noted above, a considerable amount of management judgment~~There was no impairment charge related to goodwill recorded during the three and assumptions are required in performing the annual goodwill impairment assessment. While we believe our judgments and assumptions are reasonable, different assumptions could change the estimated fair values. A number of factors, many of which we have no ability to control, could cause actual results to differ from the estimates and assumptions we employed. These factors include:

•

~~continued negative impact from the COVID-19 pandemic;~~

•

~~a prolonged global or regional economic downturn;~~

•

~~a significant decrease in the demand for our services and solutions;~~

•

~~the inability to develop new and enhanced services and solutions in a timely manner;~~

•

~~a significant adverse change in legal factors or in the business climate;~~

•

~~an adverse action or assessment by a regulator;~~

•

~~successful efforts by our competitors to gain market share in our markets;~~

•

~~disruptions to the Company's business;~~

•

~~unexpected or unplanned changes in the use of assets or entity structure; and~~

•

~~business divestitures~~

If management's estimates of future operating results change or if there are changes to other assumptions due to these factors, the estimate of the fair value may change significantly. Such change could result in impairment charges in future periods, which could have a significant impact on our operating results and financial condition.six months ended June 30, 2022.

Intangible assets with finite lives and software, equipment and property are amortized or depreciated over their estimated useful life on a straight-line basis. We monitor conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization or depreciation period. We test these assets for potential impairment whenever our management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset’s useful life and the impact of an event or circumstance on either an asset’s useful life or carrying value involve significant judgment regarding estimates of the future cash flows associated with each asset.

During the three months ended June 30, 2023, the Company recorded an impairment charge to its China reporting unit's customer relationships and acquired technologies intangible assets. The Company's forecasted revenue and expense cash flow projections indicated the carrying amounts of the intangible assets were not recoverable and therefore the Company recorded an impairment charge of $5.3 million.

There was no impairment charge related to intangible assets recorded during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022 and 2021.~~2022.

~~Fair Value of Contingent Consideration~~

Earnout liabilities arising from business acquisitions represent contingent consideration that may be payable in cash and recorded as a liability at fair value upon acquisition and re-measured at fair value in each subsequent reporting period. Changes in fair value are recorded in the consolidated statements of operations.

Determining the fair value of contingent consideration requires us to make assumptions and judgments. We estimate the fair value of contingent consideration using a Monte Carlo simulation model. These estimates involve inherent uncertainties and if different assumptions had been used, including but not limited to forecast inputs and discount rates, the fair value of contingent consideration could have been materially different from the amounts recorded. We have estimated the fair value of the contingent consideration associated with the acquisition of Safekeep as of the acquisition date and reassess our estimate each reporting period.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of ~~September~~June 30, ~~2022,~~2023, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended ~~September~~June 30, ~~2022~~2023 identified in management’s evaluation pursuant to in Rules 13a-15(d) and 15d-15(d) of the Exchange Act that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4644

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

For risk factors relating to our business, please refer to the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Any of these factors could result in a significant or material adverse effect on ~~our~~the results of our operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Not applicable.~~During the three months ended June 30, 2023, Mary Jo Prigge, the Executive Vice President, Chief Service Delivery Officer of the Company, adopted a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5–1(c). The 10b-5-1 trading arrangement was adopted by Ms. Prigge on June 20, 2023 and provides for the sale of up to 52,245 shares of the Common Stock of the Company in the period commencing on September 19, 2023 and ending on the earlier of December 29, 2023 or the execution of all trades contemplated by the plan.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.


Exhibit Number		Description
10.1*		Amendment No. 1 to the Credit Agreement, dated as of May 19, 2023, by and between CCC Intelligent Solutions Inc. and Bank of America, N.A., as Administrative Agent.
31.1*		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document


104*		Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

__________

* Filed herewith

** Furnished herewith

4746

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated: ~~November 4, 2022~~August 1, 2023	CCC INTELLIGENT SOLUTIONS HOLDINGS INC.

	By:	/s/ Githesh Ramamurthy
	Name:	Githesh Ramamurthy
	Title:	Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
Dated: ~~November 4, 2022~~August 1, 2023

	By:	/s/ Brian Herb
	Name:	Brian Herb
	Title:	Executive Vice President, Chief Financial and Administrative Officer (Principal Financial Officer)

4847


Cash - Dragoneer trust and cash	$	449,441
Cash - PIPE Financing		150,000
Cash - Forward Purchase Agreements		175,000
Less: transaction costs and advisory fees		(11,141	)
Net cash contributions from Business Combination		763,300
Less: non-cash fair value of Public Warrants and Private Warrants		(58,459	)
Net equity infusion from Business Combination	$	704,841


	September 30, 2022				December 31, 2021
	Carrying		Estimated		Carrying		Estimated
Description	Amount		Fair Value		Amount		Fair Value
Term B Loan, including current portion	$	792,270	$	768,195	$	798,073	$	799,000


	Net
	Carrying
	Amount

Balance as of December 31, 2021	$	1,466,884
Acquisition of Safekeep, Inc.		27,383
Balance as of September 30, 2022	$	1,494,267