CCC Intelligent Solutions Holdings Inc. (CCC) Earnings

Management highlights

- AI Strategic Positioning and Product Value * CCC is a scaled AI player with $120 million in annualized AI revenue growing at nearly 50% year-over-year. Management emphasizes customers buy measurable business outcomes, not just AI models, with most large AI deployments backed by multiyear customer commitments. * AI is embedded directly into existing customer workflows rather than requiring overhauls, improving efficiency and decision speed for core use cases including automated estimate change review, parts procurement, early total loss identification, and subrogation. * CCC's combination of proprietary AI, decades of claims data, existing ecosystem connectivity, and deeply integrated workflows creates a defensible moat that is difficult to replicate. - Customer Momentum and AI Adoption * Large top 5 U.S. insurers are moving AI from pilot programs to production-scale deployment, expanding partnerships both at contract renewal and mid-cycle. Q2 2026 milestones include two top 5 insurers expanding AI-enabled claims workflows via CCC's First Look solution, and the largest carrier adoption to date of CCC's AI-powered subrogation solution. * Large multi-store collision repair operators (MSOs) are also rapidly adopting AI: a leading independent MSO renewed and expanded its multiyear agreement, and now uses CCC's Mobile Jumpstart AI for 98% of its repair estimates, with early adoption of the new agentic AI-powered Mobile Jumpstart 2.0. Double-digit growth in Jumpstart adoption is seen across other large MSOs. - Ecosystem Value and New Adjacent Growth * Rising complexity in auto insurance claims (increasingly complex vehicle technology, more specialized workflows, fragmented ecosystem participants) increases the value of CCC's platform, which orchestrates coordination across insurers, repairers, OEMs, suppliers, third-party service providers, and consumers. * CCC has over 250 ecosystem partners across 20+ business areas. Recent successful new integrated launches include a consumer repair financing partnership with Sunbit (over 2,000 shops onboarded within months of launch) and an integrated medical claims analysis solution with Tempus used by 20+ carriers including multiple top 10 insurers. * OEMs are expanding partnerships with CCC for connected car initiatives focused on improving post-accident driver experiences and repair quality. - Financial Operational Highlights * Software gross dollar retention (GDR) held steady at 98%, consistent with the 98-99% range maintained over the past 5 years, with churn driven primarily by repair shop industry consolidation. Software net dollar retention (NDR) was 107%, in line with Q1 2026 and up from 106% for full-year 2025. * Adjusted gross profit was $217 million (76% margin), down modestly from prior periods due to ongoing investments, with management targeting a long-term 80% gross margin as AI revenue scales. * Adjusted EBITDA was $115 million (40% margin), up 7% year-over-year. After adjusting for a $2 million one-time benefit in Q2 2025, margins were flat year-over-year. Adjusted operating expenses grew 7% year-over-year driven by investments in technology and go-to-market resources. * Free cash flow was $82 million in Q2 2026, up from $27 million in Q2 2025. Trailing 12-month free cash flow hit $308 million (28% margin), up 36% year-over-year, with 200 basis points of margin expansion driven by favorable tax payment timing. Net leverage was 2.5x adjusted EBITDA, maintaining a prudent balance sheet.

Guidance

- Q3 2026 guidance calls for total revenue of $289.5 million to $291.5 million, representing 9% year-over-year growth at the midpoint. Adjusted EBITDA is projected to be $118 million to $120 million, with a 41% adjusted EBITDA margin at the midpoint. - Full-year 2026 guidance was raised: the midpoint of the revenue growth range was increased from 9.5% to 10% year-over-year, with total revenue projected between $1.158 billion and $1.164 billion. Adjusted EBITDA guidance is $485 million to $491 billion, implying a 42% adjusted EBITDA margin at the midpoint. - Full-year 2026 stock-based compensation is projected to be 11% to 12% of revenue, a downward revision from the prior estimate of 13%, with a target of high single-digits in 2027. - The 2026 guidance includes a 1 percentage point headwind from the roll-off of a legacy first-party catastrophe fleet business discussed in the prior quarter, consistent with prior guidance. After normalizing for this headwind, underlying growth remains at 10% in the second half of 2026. - Adjusted EBITDA margin for the second half of 2026 is expected to be approximately 42.5%, up roughly 50 basis points year-over-year. At the high end of the full-year guidance range, full-year adjusted EBITDA margin expansion is expected to approach 100 basis points year-over-year, driven by operating leverage and disciplined expense management. - Management did not provide official guidance for 2027 at this time.

Segment performance

Total company revenue for Q2 2026 was $286 million, a 10% year-over-year increase. AI-based solutions were the only disclosed product segment; they grew approximately 45% year-over-year, contributed 4 percentage points of the company's total 10% revenue growth, and accounted for 11% of total Q2 2026 revenue. Core legacy software (including Auto Physical Damage (APD), casualty, and legacy EvolutionIQ (EIQ)) makes up the remaining 89% of total revenue. Core APD and casualty segments deliver stable recurring revenue with consistent gross dollar retention, while AI solutions are the fastest growing segment, driven by cross-sell/upsell to existing core customers.

Risks & headwinds

Management did not discuss new material company-specific risks or operational failures during this call. General forward-looking statement risk disclosure notes that actual results may differ materially from projections due to risks and uncertainties, which are detailed in the company's 2025 Form 10-K and public earnings release filings.

Analyst Q&A

• Q: How does recent large-scale AI customer adoption validate CCC's ecosystem value, and how does it change large carrier conviction in AI solutions? /

  A: Large carriers only deploy CCC's AI solutions after extensive testing to confirm tangible business value, and recent enterprise-scale adoption reflects growing clarity that CCC's tools deliver near-term value. CCC's ecosystem creates unique value by enabling more efficient interactions between interconnected participants like repair facilities and insurers, which drives broader adoption across all customer segments in the network. This increasing validation of value is accelerating adoption across the entire business.

• Q: 4 percentage points of Q2 revenue growth came from AI — how much of this is from deeper rollouts at existing customers versus new module attachments, and which will drive more growth in the back half of 2026? /

  A: Both sources are contributing meaningfully to AI growth. Existing customers are expanding their footprint, adding new AI modules after already deploying core CCC solutions: for example, one large top 5 carrier that renewed its core agreements and added a full suite of AI solutions in Q1 added the new AI-powered subrogation solution in Q2. Customers are also converting pilots and evaluations to full deployments and adding newer AI modules like First Look, so both channels are expected to drive growth in the back half.

• Q: What differentiated CCC's AI subrogation solution in the recent large carrier win, and will this serve as a key reference for future adoption? /

  A: Subrogation has historically been a heavily manual process, and this carrier needed a solution that enabled fast, efficient resolution of claims between parties. CCC differentiated by integrating AI with end-to-end claim workflow access across CCC's full ecosystem, rather than offering an isolated point solution, which enabled more rapid and accurate resolution. The win is a strong reference customer, and CCC is already seeing significant market momentum for the subrogation solution across the industry.

• Q: How should investors think about underlying business momentum heading into 2027, and will AI drive meaningful top-line acceleration next year? /

  A: The business has already seen meaningful acceleration this year, with full-year organic guided growth rising to 10% from 7% in 2025. Underlying core business growth remains stable, and the 9% projected second half 2026 growth includes a 1 percentage point headwind from a legacy business transition, so underlying growth holds at 10%. Management declined to provide official 2027 guidance but expressed confidence in ongoing solid growth driven by both core and AI solutions.