CCC INTELLIGENT SOLUTIONS HOLDINGS INC. – 10-Q

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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.

Company overview

Founded in 1980, CCC is a leading provider of innovative cloud, mobile, 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 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 claims to underwriting, 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 27,000 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 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 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 of AI solutions increases automation across existing
insurer processes including vehicle damage detection, claim triage, repair
estimating, intelligent claims review, and subrogation. We deliver real-world AI
with more than 95 U.S. auto insurers actively using AI-powered solutions in
production environments. We have processed more than 9 million unique claims
using CCC deep learning AI as of December 31, 2021, an increase of more than 80
percent over December 31, 2020.

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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, and changing
customer expectations. We believe digitization plays a critical role in managing
this growing complexity while meeting customer 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.

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 total customers, including over
27,000 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 metrics 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 which are largely usage and professional service
based solutions.

               Quarter Ending   2022   2021
Software NDR   March 31         114%   106%
               June 30                 110%
               September 30            113%
               December 31             115%




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

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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 casualty solutions which are largely usage and professional
service based solutions.

               Quarter Ending   2022   2021
Software GDR   March 31         99%    98%
               June 30                 98%
               September 30            98%
               December 31             98%




Recent Developments

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.

In exchange for all the outstanding shares of Safekeep, the Company paid total
cash consideration of $32.3 million upon closing, subject to adjustment for
certain post-closing indemnities. As additional consideration for the shares,
the acquisition agreement includes a contingent earnout for additional cash
consideration based on the achievement of certain revenue targets during the
year ending December 31, 2024.

For more information, see Note 4 to the condensed consolidated financial statements
statements included elsewhere in this Quarterly Report on Form 10-Q.

Secondary Offering-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 to the public of $9.70 per share. In addition, the
selling shareholders granted the underwriters a 30-day option to purchase up to
an additional 3,000,000 shares of the Company's common stock at the same per
share price. The Company did not receive proceeds from the sale of these shares
by the existing stockholders.

Components of operating results

Revenue

Revenue is derived from the sale of software subscriptions and other revenue,
primarily professional services. Software subscription revenues are comprised of
fees from customers for the right to use the hosted software over the contract
period without taking possession of the software. These revenues are billed on
either a subscription or transactional basis with subscription revenue
recognized ratably over the contract period and transactional revenue recognized
when the transaction for the related service occurs. We generally invoice
software subscription agreements monthly either in advance or in arrears, over
the subscription period. Software subscription revenue accounted for $179.8
million and $152.0 million, or 96% and 96%, of total revenue during the three
months ended March 31, 2022 and 2021, respectively.

Other income includes client fees for the Company’s professionals
services and non-software services and are recognized in the period in which the service
is done.

Costs and Expenses

Cost of Revenues

Cost of revenues, excluding amortization of acquired technologies

These costs include costs of software subscription and professional services
revenue. Our cost of software subscription revenue is primarily comprised of
cloud infrastructure costs, software production costs, information technology
("IT") security costs, license

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and royalty fees paid to third parties and personnel-related expenses, including
salaries, other direct personnel-related costs and stock-based compensation, and
depreciation expense. We expect cost of revenue, exclusive of amortization of
acquired intangibles, to increase in absolute dollars as we continue to hire
personnel, require additional cloud infrastructure and incur higher royalty fees
in support of our revenue growth.

Our cost of other revenue is primarily comprised of personnel-related expenses
for our customer support teams and contractors, including salaries, direct
personnel-related costs and stock-based compensation, and fees paid to third
parties. We expect our cost of other revenue to increase in absolute dollars in
support of our revenue growth.

Amortization of acquired technologies

We amortize at cost of revenue the capitalized costs of technologies acquired in
link with historical acquisitions.

Operating Expenses

Operating expenses are classified into the following categories:

Research and development

Our research and development expenses consist primarily of personnel-related
costs, including stock-based compensation, and costs of external development
resources involved in the engineering, design and development of new solutions,
as well as expenses associated with significant ongoing improvements to existing
solutions. Research and development expenses also include costs for certain IT
expenses.

Research and development costs, other than software development costs qualifying
for capitalization, are expensed as incurred. Capitalized software development
costs consist primarily of personnel-related costs.

We expect research and development expenses, excluding stock-based compensation,
to increase in absolute dollars as we continue to dedicate substantial resources
to develop, improve and expand the functionality of our solutions. We also
expect an increase in the rate of capitalization of our investments in research
and development for the foreseeable future.

Sales and marketing

Our selling and marketing expenses consist primarily of personnel-related costs
for our sales and marketing functions, including sales commissions and
stock-based compensation. Additionally, selling and marketing expenses include
advertising costs, marketing costs and event costs, including the Company's
annual industry conference, generally held annually in the second quarter.

We expect our selling and marketing expenses, excluding stock-based
compensation, to increase in absolute dollars as we continue to increase
investments to support the growth of our business.

General and administrative

Our general and administrative expenses consist primarily of personnel-related
costs, including stock-based compensation, for our executive management and
administrative employees, including finance and accounting, human resources,
information technology, facilities and legal functions. Additionally, general
and administrative expenses include professional service fees, insurance
premiums, and other corporate expenses that are not allocated to the above
expense categories.

We anticipate that our general and administrative expenses, excluding shares
compensation, to increase in absolute dollars as we continue to expand our
operations, hire additional staff and incur costs as a public company.

Amortization of intangible assets

Our amortization of intangible assets includes the capitalized costs of
customer relations and advantageous rental conditions acquired as part of
historic purchases.

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Non-operating income (expenses)

Non-operating income (expenses) are classified into the following categories:

Interest charges

Interest expense comprises interest expense accrued or paid on our indebtedness.
We expect interest expense to vary each reporting period depending on the amount
of outstanding indebtedness and prevailing interest rates.

Gain on change in fair value of interest rate swaps

Gain (loss) on change in fair value of interest rate swaps comprises fair value
adjustments of our interest rate swap agreements at the end of each reporting
period.

In September 2021, we extinguished the interest rate swaps and do not expect to
recognize any gain or loss on the change in fair value of interest rate swaps in
subsequent periods.

gain on sale of Cost Method Investment

Gain on sale of cost method investment comprises the gain recognized at the time
of sale for the Company's cost method investment. Subsequent to the sale in
February 2022, the Company no longer has investments accounted for using the
cost method.

Change in fair value of warrant liabilities

Change in fair value of warrant liabilities comprises fair value adjustments of
the Private Warrants assumed in connection with the Business Combination. We
expect the change in fair value of warrant liabilities to vary each reporting
period depending on the fair value adjustments and number of exercises of
outstanding Private Warrants during each reporting period.

Other income (expenses), net

Other income (expenses), net, mainly includes interest income on
Company cash balances and gains and losses on foreign currency transactions
related to the impact of transactions denominated in a foreign currency.

Tax benefit

Income tax benefit consists of U.S. and state income taxes and income taxes in
certain foreign jurisdictions in which we conduct business. Earnings from our
non-U.S. activities are subject to local country income tax and may be subject
to current U.S. income tax. Due to cumulative losses, we maintain a full
valuation allowance for deferred tax assets for our operations in foreign
jurisdictions. We expect to maintain this full valuation allowance for the
foreseeable future.

Operating results

Comparison of the three months ended March 31, 2022 at the end of three months
March 31, 2021

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                                          Three Months Ended March 31,      

Switch

(dollar amounts in thousands,
except share and per share data)             2022               2021              $             %
Revenues                                $       186,823     $     157,789     $  29,034          18.4 %
Cost of revenues, exclusive of
amortization of
  acquired technologies                          42,701            38,013         4,688          12.3 %
Amortization of acquired
technologies                                      6,695             6,580           115           1.7 %
Cost of revenues(1)                              49,396            44,593         4,803          10.8 %
Gross profit                                    137,427           113,196        24,231          21.4 %
Operating expenses:
Research and development(1)                      35,681            30,624         5,057          16.5 %
Selling and marketing(1)                         26,802            19,417         7,385          38.0 %
General and administrative(1)                    44,207            37,839         6,368          16.8 %
Amortization of intangible assets                18,080            18,077             3           0.0 %
Total operating expenses                        124,770           105,957        18,813          17.8 %
Operating income                                 12,657             7,239         5,418          74.8 %
Other income (expense):
Interest expense                                 (7,341 )         (18,766 )      11,425          60.9 %
Gain on change in fair value of
interest rate
  swaps                                               -             3,277        (3,277 )      -100.0 %
Change in fair value of warrant
liabilities                                       2,136                 -         2,136            NM
Gain on sale of cost method
investment                                        3,578                 -         3,578            NM
Other income, net                                    82                87            (5 )        -5.7 %
Total other income (expense)                     (1,545 )         (15,402 )      13,857          90.0 %
Income (loss) before income taxes                11,112            (8,163 )      19,275            NM
Income tax benefit                                  863             3,079        (2,216 )          NM
Net income (loss)                       $        11,975     $      (5,084 )   $  17,059            NM
Net income (loss) per share
attributable to common
  stockholders:
Basic                                   $          0.02     $       (0.01 )
Diluted                                 $          0.02     $       (0.01 )
Weighted-average shares used in
computing net
  income (loss) per share
attributable to common
  stockholders:
Basic                                       603,104,839       505,072,914
Diluted                                     641,028,410       505,072,914


(1) Includes stock-based
compensation expense as follows (in
thousands):
                                          Three Months Ended March 31,
                                             2022               2021
Cost of revenues                        $           849     $         219
Research and development                          3,530               575
Sales and marketing                               4,830               555
General and administrative                       14,435            11,305
Total stock-based compensation
expense                                 $        23,644     $      12,654



NM-Not Meaningful

Revenues

Revenue increased by $29.0 million to $186.8 million, or 18.4%, for the three
months ended March 31, 2022, compared to the three months ended March 31, 2021.
The increase in revenue was primarily a result of 15% growth from existing
customer upgrades and expanding solution offerings to these existing customers
as well as 3% growth from new customers.

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Revenue cost

Cost of revenues increased by $4.8 million to $49.4 million, or 10.8%, for the
three months ended March 31, 2022, compared to the three months ended March 31,
2021.

Cost of revenues, excluding amortization of acquired technologies

Cost of revenues, exclusive of amortization of acquired technologies, increased
$4.7 million to $42.7 million, or 12.3%, for the three months ended March 31,
2022, compared to the three months ended March 31, 2021. The increase was due to
a $1.6 million increase in personnel costs, including stock-based compensation,
a $1.8 million increase in third party license and royalty fees and a $0.8
million increase in consulting costs.

Amortization of acquired technologies

The amortization of acquired technologies was $6.7 million for three months
finished March 31, 2022compared to a $6.6 million for the three months ended
March 31, 2021.

Gross profit

Gross profit increased by $24.2 million to $137.4 million, or 21.4%, for the
three months ended March 31, 2022, compared to the three months ended March 31,
2021. Our gross profit margin increased to 73.6% for the three months ended
March 31, 2022 compared to 71.7% for the three months ended March 31, 2021. The
increase in both gross profit and gross profit margin was due to increased
software subscription revenues and economies of scale resulting from fixed cost
arrangements.

Research and Development

Research and development expense increased by $5.1 million to $35.7 million, or
16.5%, for the three months ended March 31, 2022, compared to the three months
ended March 31, 2021. The increase was due to a $6.4 million increase in
personnel costs, including stock-based compensation, a $1.0 million increase in
consulting costs, and a $0.9 million increase in IT costs, partially offset by a
$3.6 million increase in the amount of capitalized time on development projects.


Selling and Marketing

Selling and marketing expense increased by $7.4 million to $26.8 million, or
38.0%, for the three months ended March 31, 2022, compared to the three months
ended March 31, 2021. The increase was primarily due to a $6.5 million increase
in personnel costs, including stock-based compensation, sales incentives and
employee travel costs, a $0.3 million increase in marketing and event costs and
a $0.3 million increase in consulting costs.

General and administrative

General and administrative expense increased by $6.4 million to $44.2 million,
or 16.8%, for the three months ended March 31, 2022, compared to the three
months ended March 31, 2021. The increase was primarily due to a $3.7 million
increase in personnel costs, including stock-based compensation, a $1.8 million
increase in insurance costs and a $0.8 million increase in loss on disposal of
software, equipment and property associated with the closure of the Company's
previous headquarters in March 2022.

Amortization of intangible assets

The amortization of intangible assets has been $18.1 million during the three months
finished March 31, 2022 and 2021.

Interest charges

Interest expense decreased by $11.4 million to $7.3 million, or 60.9%, for the
three months ended March 31, 2022, compared to the three months ended March 31,
2021 primarily due to less outstanding long-term debt and a lower variable
interest rate during the three months ended March 31, 2022.

Gain on change in fair value of interest rate swaps

The gain recognized during the three months ended March 31, 2021 was due to the
close to the maturity date of the swap contracts before the
the termination of interest rate swaps in September 2021.

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gain on sale of Cost Method Investment

Gain on sale of cost method investment was $3.6 million for the three months
ended March 31, 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 three months ended March 31, 2021.

Change in fair value of warrant liabilities

Change in fair value of warrant liabilities was $2.1 million for the three
months ended March 31, 2022. The warrant liabilities were recorded as part of
the Business Combination and therefore did not exist during the three months
ended March 31, 2021. The income from the change in fair value was due to the
decrease in the estimated fair value of the Private Warrants, primarily from the
lower price of the Company's common stock at March 31, 2022, compared to
December 31, 2021.


Income Tax Benefit

Income tax benefit was $0.9 million for the three months ended March 31, 2022,
compared to $3.1 million for the three months ended March 31, 2021. The change
in the income tax benefit was due to the Company having pretax income during the
three months ended March 31, 2022, reduced by the tax benefits of discrete
items, compared to a pretax loss during the three months ended March 31, 2021.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe
that Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income and Adjusted
Earnings Per Share, 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 of
acquired technologies, stock-based compensation and related employer payroll
tax, which are not indicative of our recurring core business operating results.
The Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by
Revenue. Gross Profit is the most directly comparable GAAP measure to Adjusted
Gross Profit, and you should review the reconciliation of Gross Profit to
Adjusted Gross Profit below and not rely on any single financial measure to
evaluate our business.

The following table reconciles the gross margin with the adjusted gross margin for
three months completed March 31, 2022 and 2021:

                                                        Three months ended March 31,
(amounts in thousands, except percentages)                2022              

2021

Gross Profit                                         $      137,427       $ 

113 196

Amortization of acquired technologies                         6,695         

6,580

Stock-based compensation and related employer
payroll tax                                                     933                  219
Adjusted Gross Profit                                $      145,055       $      119,995
Gross Profit Margin                                              74 %                 72 %
Adjusted Gross Profit Margin                                     78 %                 76 %




For the three months ended March 31, 2022, Adjusted Gross Profit increased $25.1
million or 20.9%, while Adjusted Gross Profit Margin increased 2% to 78%. Each
of these increases in Adjusted Gross Profit and Adjusted Gross Profit Margin
were primarily due to an increase in software subscription revenue and economies
of scale resulting from fixed cost arrangements.

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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 income
(loss) adjusted for interest, taxes, depreciation, amortization, gain on change
in fair value of interest rate swaps, change in fair value of warrant
liabilities, stock-based compensation expense and related employer payroll tax,
business combination transaction costs, lease abandonment charges, lease overlap
costs for the incremental expenses associated with the Company's new corporate
headquarters prior to termination of its existing headquarters' lease, net costs
related to divestiture, merger and acquisition ("M&A") and integration costs and
gain on sale of cost method investment. Net income (loss) is the most directly
comparable GAAP measure to Adjusted EBITDA, and you should review the
reconciliation of net loss to Adjusted EBITDA below and not rely on any single
financial measure to evaluate our business.

Adjusted EBITDA is intended as a supplemental measure of our performance that is
neither required by, nor presented in accordance with, GAAP. You should be aware
that when evaluating Adjusted EBITDA, we may incur future expenses similar to
those excluded when calculating this measure. In addition, our presentation of
this measure should not be construed as an inference that our future results
will be unaffected by unusual or non-recurring items.

The following table reconciles net earnings (loss) and adjusted EBITDA for
three months completed March 31, 2022 and 2021:

                                                         Three months ended March 31,
(dollar amounts in thousands)                              2022                 2021
Net income (loss)                                     $       11,975       $       (5,084 )
Interest expense                                               7,341               18,766
Income tax benefit                                              (863 )             (3,079 )
Amortization of intangible assets                             18,080        

18,077

Amortization of acquired technologies-Cost of

  revenue                                                      6,695        

6,580

Depreciation and amortization related to
software,
  equipment and property                                       6,807                5,153
EBITDA                                                        50,035               40,413

Gain on change in fair value of interest rate

  swaps                                                            -               (3,277 )
Change in fair value of warrant liabilities                   (2,136 )                  -
Stock-based compensation expense and related
employer payroll tax                                          24,656        

12,654

Business combination transaction costs                           732                3,002
Lease abandonment                                              1,222                  909
Lease overlap costs                                            1,338                  924
Net costs related to divestiture                                  60        

772

M&A and integration costs                                      1,407                    -
Gain on sale of cost method investment                        (3,578 )                  -
Adjusted EBITDA                                       $       73,736       $       55,397




Adjusted EBITDA increased $18.3 million, or 33.1%, for the three months ended
March 31, 2022, compared to the three months ended March 31, 2021. This increase
was driven primarily by increased software subscription revenues from expanding
solution adoption among existing customers, existing customer upgrades and sales
to new customers and economies of scale resulting from fixed cost arrangements.

Adjusted net earnings 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 income (loss) adjusted for the after-tax effects of
amortization, gain on change in fair value of interest rate swaps, change in
fair value of warrant liabilities, stock-based compensation expense and related
employer payroll tax, business combination transaction costs, lease abandonment
charges, lease overlap costs for the incremental expenses associated with the
Company's new corporate headquarters prior to termination of its existing
headquarters' lease, net costs related to divestiture, M&A and integration costs
and gain on sale of cost method investment. Net income (loss) is the most
directly comparable GAAP measure to Adjusted Net Income, and you should review
the reconciliation of net income (loss) to Adjusted Net Income below and not
rely on any single financial measure to evaluate our business.

                                       38
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Adjusted Net Income and Adjusted Earnings Per Share are intended as supplemental
measures of our performance that are neither required by, nor presented in
accordance with, GAAP. You should be aware that when evaluating Adjusted Net
Income and Adjusted Earnings Per Share, we may incur future expenses similar to
those excluded when calculating these measures. In addition, our presentation of
these measures should not be construed as an inference that our future results
will be unaffected by unusual or non-recurring items.

The following table reconciles net income (loss) to Adjusted Net Income and
Adjusted Earnings per Share for the three months ended March 31, 2022 and 2021:

                                                       Three months ended March 31,
(dollar amounts in thousands)                             2022               2021
Net income (loss)                                    $        11,975     $      (5,084 )
Amortization of intangible assets                             18,080        

18,077

Amortization of acquired technologies-

  Cost of revenue                                              6,695        

6,580

Gain on change in fair value of

  interest rate swaps                                              -            (3,277 )
Change in fair value of warrant liabilities                   (2,136 )      

Stock-based compensation expense and related
employer payroll tax                                          24,656        

12,654

Business combination transaction costs                           732             3,002
Lease abandonment                                              1,222             1,833
Lease overlap costs                                            1,338                 -
Net costs related to divestiture                                  60        

772

M&A and integration costs                                      1,407        

Gain on sale of cost method investment                        (3,578 )               -
Tax effect of adjustments                                    (11,577 )          (9,551 )
Adjusted net income                                  $        48,874     $      25,006

Adjusted net earnings per share attributable to

  common stockholders:
Basic                                                $          0.08     $        0.05
Diluted                                              $          0.08     $        0.05
Weighted average shares outstanding:
Basic                                                    603,104,839       505,072,914
Diluted                                                  641,028,410       523,164,329




Adjusted Net Income increased $23.9 million, or 95.4%, for the three months
ended March 31, 2022, compared to the three months ended March 31, 2021. The
increase was driven primarily by increased software subscription revenues from
expanding solution adoption among existing customers, existing customer upgrades
and sales to new customers and economies of scale resulting from fixed cost
arrangements and less interest expense resulting from less outstanding long-term
debt and a lower variable interest rate.

Cash and capital resources

We have financed our operations from cash flows from operations. The Company
generated $46.9 million of cash flows from operating activities during the three
months ended March 31, 2022. As of March 31, 2022, the Company had cash and cash
equivalents of $195.5 million. The Company had a working capital surplus of
$187.5 million at March 31, 2022 and had an accumulated deficit at March 31,
2022 totaling $734.4 million. As of March 31, 2022, the Company had $798.0
million aggregate principal outstanding on term loans.

We believe that our existing cash and cash equivalents, our cash flows from
operating activities and our borrowing capacity under our 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
concerning possible investments or acquisitions of
companies, 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 funding
arrangements may not be available on terms favorable to us or at all.

                                       39
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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 the Company’s 2017 Senior Credit Agreement
credit agreement (the “Senior Credit Agreement”), dated April 27, 2017as
amended on February 14, 2020.

The proceeds of the 2021 Credit Agreement were used to repay all
borrowings under the senior credit agreement.

2021 Credit Agreement-The 2021 Credit Agreement consists of the $800.0 million
Term B Loan and 2021 Revolving Credit Facility for an aggregate principal amount
of $250.0 million. 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 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 year ending December 31, 2022, the Term B
Loan requires 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 2021 Credit Agreement. When
a principal prepayment is required, the prepayment offsets the future quarterly
principal payments of the same amount. As of March 31, 2022, the Company is not
subject to the annual excess cash flow calculation and no such principal
prepayments are required.

From March 31, 2022outstanding term loans B were $798.0
million
whose, $8.0 million is classified as current.

Borrowings under the 2021 Credit Facility bear interest at rates based on the
ratio of the Company's and 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. The interest rate per
annum applicable to the loans under the 2021 Credit Facility are 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 Loans, 1.50% and with respect to the 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
the 2021 revolving credit facility.

During the three months ended March 31, 2022, the weighted-average interest rate
on the outstanding borrowings under the Term B Loan was 3.0%. The Company made
interest payments of $5.9 million during the three months ended March 31, 2022.

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. At March 31, 2022, $249.3 million was available to be borrowed under
the 2021 Revolving Credit Facility.

Borrowings under the 2021 Lien Credit Agreement are guaranteed by Cypress
Holdings, Intermediate Holdings II, Inc. and certain of its US subsidiaries by a
perfected first priority lien on the stock of CCC Intelligent Solutions Inc. and
substantially all of its assets, subject to various limitations and exceptions.

The 2021 Credit Agreement contains representations and warranties, and
positive and negative clauses, which, among other things, restrict, subject
with certain exceptions, our ability to: incur additional indebtedness, incur
liens, engage in mergers, consolidations, liquidations or dissolutions; Pay
dividends and distributions on, or repay, redeem or withdraw our capital
Stock; and make certain investments, acquisitions, loans or advances.

In addition, beginning with the three months ended March 31, 2022, 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 cannot exceed 6.25 to 1.00. As of March 31, 2022, the
Company was not subject to the financial covenant.

                                       40
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Senior credit agreement April 2017the Company entered into the First
Privilege credit agreement.

The First Lien Credit Agreement initially consisted 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 for an additional term loan in the amount of
$375.0 million and reduces the amount of first lien liabilities
Revolvers for a total principal amount of $91.3 million. The first privilege
Revolvers continued to have a sub-limit 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 an early repayment of the principal of $525.0 million on July 30, 2021.
Subsequently, in September 2021using proceeds from term loan B
provided for in the 2021 Credit Agreement, the Company has fully repaid the balance
$804.2 million outstanding borrowings on the senior 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 March 31, 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 $13.4 million during the three months ended
March 31, 2021.

Cash Flows

The following table presents a summary of the cash flow data for the three months
finished March 31, 2022 and 2021:

                                                            Three months ended March 31,
(dollar amounts in thousands)                                2022           

2021

Net cash provided by operating activities               $       46,865       $        38,234
Net cash used in investing activities                          (42,615 )              (4,686 )
Net cash provided by (used in) financing activities              8,691              (136,501 )
Net effect of exchange rate change                                  12                     9
Change in cash and cash equivalents                     $       12,953       $      (102,944 )




Net cash provided by operating activities was $46.9 million for the three months
ended March 31, 2022. Net cash provided by operating activities consists of net
income of $12.0 million, adjusted for $30.9 million of non-cash items, $14.7
million for changes in working capital and ($10.7) million for the effect of
changes in other operating assets and liabilities. Significant non-cash
adjustments include depreciation and amortization of $31.6 million, stock-based
compensation expense of $23.6 million, non-cash lease expense of $1.2 million,
deferred income tax benefits of ($21.2) and a change in fair value of warrant
liabilities of ($2.1) million. The change in net operating assets and
liabilities was primarily a result of a decrease in accrued expenses of $16.5
million due to timing of cash disbursements and employee incentive plan
payments, an increase in other assets of $10.8 million due to timing of payments
and other deferred costs, partially offset by a decrease in income taxes of
$20.4 million due to timing of payments, a decrease in accounts receivable of
$2.0 million due to timing of receipts of payments from customers, an increase
in accounts payable of $4.8 million due

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the timing of cash disbursements and an increase in deferred revenue of $2.4
million
due to the timing of customer receipts and revenue recognition.

Net cash used in investing activities was $42.6 million for the three months
ended March 31, 2022. Net cash used in investing activities was due to $32.2
million for a business acquisition and $14.3 million of capitalized internally
developed software projects and purchases of software, equipment and property,
partially offset by $3.9 million of proceeds from the sale of a cost method
investment.

Net cash provided by financing activities was $8.7 million for the three months
ended March 31, 2022. Net cash provided by financing activities was due to $10.7
million of proceeds from exercise of stock options, partially offset by $2.0
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, included in our Annual Report on
Form 10-K.

Fair value of contingent consideration

Liabilities related to price supplements arising from business acquisitions represent
consideration that may be payable in cash and recognized as a liability at fair value
value on acquisition and remeasured to fair value at each
reporting period. Changes in fair value are recorded in the consolidated financial statements
transaction records.

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.
During the three months ended March 31, 2022, we have made a preliminary
estimate of the fair value of the contingent consideration associated with the
acquisition of Safekeep.
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