Greetings, and welcome to the CCC Intelligent Solutions Fourth Quarter and Fiscal Year 2021 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brian Denyeau with ICR. Please go ahead.

Good morning, and thank you for joining us today to review CCC's fourth quarter and fiscal year 2021 financial results, which we announced in the press release issued before the open of market today. Joining the call today are Githesh Ramamurthy, CCC's Chairman and CEO; and Brian Herb, CCC's CFO. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in our earnings release that is available on our Investor Relations website under the heading Risk Factors in our registration statement on Form S-1 filed with the SEC on September 9, 2021, and our 2021 annual report on Form 10-K to be filed with the SEC. Further, these comments and the Q&A that follows are copyrighted today by CCC Intelligence Solution Holdings Incorporated. Any recording or retransmission or reproduction or other use of the same for profit or otherwise without our prior consent of CCC is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. Please note that the discussion on today's call includes certain non-GAAP financial measures as defined by the SEC. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to the company's financial condition and the results of operations. A reconciliation of GAAP to non-GAAP measures is available in our earnings release that is available on our Investor Relations website. Thank you. And now I'll turn it over to Githesh.

Thanks, Brian, and thanks to all of you for joining us today. I'm pleased to report that CCC delivered exceptionally strong top and bottom line results in the fourth quarter. I'd like to start by summarizing our financial results for the fourth quarter and full year. For the fourth quarter, revenue was $187.1 million, up 19% adjusted for divestiture last year. This is ahead of our guidance and our strongest growth performance in years. Adjusted EBITDA was $75.7 million, which grew 30% year-over-year. This represents a 40% margin, up more than 300 basis points from the fourth quarter of 2020. And for the full year, total revenue was $688.3 million, up 15% adjusted for divestiture last year. And adjusted EBITDA was $261.4 million, representing a 38% margin. Both our revenue and adjusted EBITDA performance were well ahead of our initial guidance for the year, reflecting the strong momentum across our business. The CCC cloud today sits at the heart of the digital transformation of the P&C insurance economy. More than 30,000 customers across the ecosystem trust CCC to provide state of the art cloud-based solutions that leverage AI and mobile to boost operational efficiency and greatly improve the customer experience. We believe this is a long-term trend that is still in the early days. This gives us great confidence in our ability to drive consistent, durable growth in revenue and profitability. While we have delivered organic revenue growth for 2 decades, our performance in 2021 was particularly strong. We continue to lay the foundation for sustained growth as we delivered more than 1,700 product releases on the CCC cloud in 2021. This is up from 1,400 releases the prior year. This equates to an average of more than 30 product releases per week. These included important new launches, like CCC…

Thanks, Githesh. Today, I'll review our fourth quarter and fiscal year 2021 results and also provide guidance for the first quarter and full year of 2022. Total revenue for the fourth quarter was a $187.1 million, up 19% from the prior year period on an adjusted basis. We look at growth on an adjusted basis, which excludes from our 2020 revenue a portion of our casualty product line, clinical professional services, that was divested at the end of 2020. We believe this provides the best view into the underlying growth of the business, so our quarterly performance can be looked at on a like-for-like basis. From a trend perspective, 19% growth is the sixth sequential quarter of accelerating year-over-year revenue growth. Growth in the quarter was primarily driven by strong cross-sell and up-sell activity, including the impact of several large renewals signed in the quarter, with expanding solution bundles and also deals closed earlier in the year that contained sizable increases in revenue. We also saw continued strength in new logos, largely in part suppliers and repair facilities. We are pleased with our performance in the quarter and the underlying momentum in the business, which only had a limited benefit from transactional volume recoveries in the quarter and only 1% impact on total growth for the full year. I do want to highlight that, in the fourth quarter, we had approximately $4 million of non-recurring revenue, which contributed approximately 2 points of growth, most of which was anticipated in our guidance. The non-recurring revenue related to 2 items, a Chinese customer renewal that included several months of catch-up revenue and also some year-end true-ups that happened in Q4 and will reset in 2022. Turning now to our key metrics. Software Gross Dollar Retention or GDR captures the amount of revenue…

[Operator Instructions] Our first question comes from the line of Bhavan Suri with William Blair.

It's Dylan on for Bhavan. I wanted to maybe start on the STPs and maybe how they serves as an easy on-ramp for some of the AI tools you've kind of talked about as well here. But maybe how should we be thinking about the market potential and STP? Is it a share of maybe some of the savings you're driving for customers? How can a Safekeep maybe plays into this and maybe some of the long-term initiatives for the STP and AI components?

Sure. This is Githesh. It's really -- you have to think about it in 2 parts. What we've introduced first is Estimate-STP. So Estimate-STP is a component of the overall STP or straight-through processing capability. As we mentioned before, each claim leads to a hundreds of different activities or transactions. So one of the hardest steps is really taking the estimate from the accident and the photo to what is this going to cost to repair and that's really what Estimate-STP does. So what we've done with several and many other components is this also gives us an entry point, a demonstration to customers that we've been able to deliver, Estimate-STP, which is one of the hardest AI problems to solve at scale and it gives us great ability to deliver other components of STP, hence the several acquisition of Safekeep. Does that help?

Yes. That's very helpful, I guess to maybe building off of that and maybe this is a little bit more of a longer-term kind of potential opportunity here. But thinking about kind of some of the fraud dynamics that takes place across kind of the claims life-cycle as well. You have a lot of data kind of running across your platform here, insights maybe from the AI pieces. But thinking, I guess, maybe, what our carriers here thinking and analyzing kind of into the fraud dynamics and the value that you can derive to better address the fraud that they're seeing across their solutions as well?

Yes, we do we do some of that already. For example, our platforms are connected real time to National Insurance Crime Bureau. We have a large volume, a trillion dollars of historical data to look at claims that have been reported across carrier opportunities. So as the technology evolves, clearly, there are opportunities to help protect against that and we do see that as a key component of our overall STP vision.

Our next question comes from the line of Chris Moore with CJS Securities.

Just with the organic growth for the quarter is 19%, software NDR was [ 115% ]. Is it too simple to say the new logos are probably 4% or so in the quarter?

Hey, Chris. Brian here. Yes, that's right. So if you break down the 19% NDR was [ 115% ] and new logos was about 4%. So that is the math for the quarter.

Got it. In terms of the '22 guide, how much trend -- and you may have said this, I may have missed it, how much transactional kind of volume recovery is incorporated in there?

Yes, there is not much. I mean, we talked about in '21 having one point of recovery from volume and that's where we ended up in our '21 position. As we look forward on the guidance, we have less than that going into '22, so it's less than a point. So we're not expecting -- we're not baking into the plan of further recovery. And we do expect recovery to come back, but we don't know the timing or the phasing and so what that looks like coming back in. So we have not assumed further recovery in our plan.

Got it. And last one for me, probably get a little spoiled, for you guys level and precision of guidance '21 -- '22 is 11%, your normal range is 7% to 10%. From where we're sitting today, '23 is probably best to look at from that normal range?

Yes, that's right. We're not adjusting anything beyond where we are today. So I would say, as we think beyond '22, we're very focused on our organic revenue guidance that we've provided of 7% to 10%.

Our next question comes from the line of Jackson Ader with JPMorgan.

Hi, this is Maya on for Jackson. So talking about some of the large multiyear renewals, when do you typically see large customers engaging with you and are there typical renewal cycles that you can forecast?

Maya, first of all, great to have you on. I would just say that many of our customers, if not most of our customers, have been customers for 20 plus years. So yes, there is a pattern of renewals like some of the contracts indicated, were 5-year renewals. So yes, some of those renewals will come up 5 years from now, but what also happens in our business is that customers, as we introduce new solutions, many of our customers are adopting those new solutions. And as part of adopting additional bundles, additional solutions, sometimes they say, "hey, would love the predictability of actually extending the contract for the route while we adapt the solutions." So it can happen both ways. People just adopt new solutions or people adopt new solutions and say, "I'm going to extend it a little further." And sometimes it comes based on contract cycles. This is one of the reasons I wanted to quote the top 25 carriers alone, we have about a billion dollars of visibility for the next few years in contracted revenue.

Got it. That's really helpful. And then just going off of that in terms of having high visibility for this year, how does that compare to some of the revenue coverage that you would have gained in the previous years?

I would not say it is anything particularly unusual. This is just -- this is a normal pattern that we've seen for 20, 25 plus years and is a fundamental reason we maintain a net promoter score of 80, which as you know for enterprise software is leading edge. That means customers who really deliver great solutions for customers, drive a really great NPS, and that's really important to these long-term relationships.

Our next question comes from the line of Kirk Materne with Evercore ISI.

Githesh, can you talk a little bit, actually going back into those bigger contracts. So when you're talking to those customers about up-sells or cross-sells in this case, I guess. Is that competitive? Are there other solutions that they're baking you off against? Is it more of a just an ability for them to be at the point where they can start thinking through the process changes required to take on this technology? I'm just kind of curious, what sort of -- if there's any gating factors or it's just sort of working through the sales process with them?

Yes. I mean, look, there are always competitive issues, right? That's always a given. But the fundamental difference between what we offer versus Single Point Solutions is that we offer a truly end-to-end solution. So all the way from connecting to your consumers, all the way through thousands of your employees, making hundreds and hundreds of decisions per day, all the way through to repair facilities, parts providers. So we provide a seamless end-to-end integration. And so that's a huge differentiation for CCC. Second, because our cloud is already deeply integrated into customers' platforms, it makes it easier for customers to start testing, piloting, and really lighting up and testing out new solutions. So as customers pilot, light up, and test new solutions that are fully integrated, it becomes more of a "hey, did the solution have the impact that we were hoping it would have. Oh, yes, it had the impact. We're really thrilled with it." So a lot of customers, for example, when I talked about Estimate-STP, lot of people said this has never been done in the world before, can it really happen? When they tested it and used it, in fact, one customer commented to another customer, it actually works better than CCC advertised it. So it's really a matter of piloting and testing and getting it up and running. So those are really the issues.

That's helpful. And then Brian, when we think about these up-sell opportunities with your customers, just the revenue base serve automatically revert higher to the extent they're buying your products from you? Or is this something safer or the bigger, the top 5 or the 2 of the top 5 that you up-sold this quarter? Will that revenue from these new products sort of blend in over time? I'm just trying to get a sense on how those contracts work from a rev rec perspective?

Yes, it's a bit of both. So some of the deals they'll bring in products like Engage and for the MSO and roll it out across their base. And that will just start to be in the base going forward. Other products like STP, where we've cross-sold, we'll build over time, as they continue to adopt that technology. So it's not a pure one way or the other, some of it will step up immediately and kind of be part of the base and some will build over time. So we see both varieties.

Our next question comes from the line of Gary Prestopino with Barrington Research.

Hey, Githesh or Brian, can you give us some idea of what your software, NDR was 2 or 3 years ago versus where it is now? And then I have another one I want to ask on Safekeep.

Yes, that's fine. Yes, if you look at where NDR was a couple of years back and kind of go beyond COVID year, it was around 106%, 107%, so that's kind of our historical trend. So we clearly are trending over those historical rates in the NDRs that we've delivered in '21.

In terms of if it's 106% and you are at what, [ 115% ], so we're talking about 900 basis points of growth and a lot of that I assume is really going to be from new uptake of new products and higher-priced products, et cetera. Is that correct?

Yes, it is. There's a few things that are going on, right? So if you look at the blended rate over the 4 quarters of NDR, it's about 111% is kind of what we averaged across '21. There's a few things going on in that. One is these large expansion deals that we've talked about, they've set a foundation for this accelerated rate across the top carriers. We saw it in the top MSOs. We also have seen good mobile AI, Engage adoption system of our digital solutions, we're seeing adoption across the broad client base. And then we're also seeing pickup in up-sell at the repair facilities and seeing that up-sell at the client base. So all of those are contributing. The other factor that you'd need to note is we have highlighted that cross-sell will be a larger proportion of our growth going forward. So if you look back historically, cross-sell has been about 2/3 of our growth. We've been highlighting that that's going to move to more like 80% of our total growth going forward and we're starting to see that play out in '21 and expect that trend to continue in '22 and beyond. So that's another factor that's playing through.

Okay. And then very quickly, Githesh, the Safekeep acquisition sounds interesting, but I guess, you kind of alluded to that it was a newer technology that hadn't really been deployed in the market. What do you have to do if anything to tweak it to get it to where you want it to be? And was the fact that it wasn't out there in the market, that it was just a single-point solution and they just could not compete?

Hey, Gary. I would say, fundamentally, what we saw with Safekeep is that they had solved some really hard problems, right? So subrogation is the process by which you're saying who is at fault? Where should I collect money from et cetera? And there's a lot of complexity. So the team has done a fabulous job of understanding, building the technology. And frankly, when we went around talking to a lot of their customers, early customers that they had who were in pilot and early test and the feedback was just simply outstanding. It's one of those things where we could say, look, we can take a few years or we could really go with the solution and best of all, we love the team. Jeff, the CEO, the leadership team, fabulous team and then when you put that capability on our platform, where you now can deliver to customers an end-to-end solution, we feel we can really accelerate the movement of this technology through, and it fits exactly into our STP -- overall STP vision.

Our next question comes from the line of Yitchuin Wong with Citi.

Githesh, I think you talked about the meaningful expansion with 2 of your top 10 P&C clients. I'm wondering, are those expansion like kind of came in, in regards to what you are expecting on -- before? And then, also what are some of the products that was added or products that was not added as surprise this year? Can you give us a little more detail there?

Yes. So first of all, I would say, there were no surprises. Because we worked with our core customers for a very long time, both our repair customers, our multi-store operator customers, our insurance customers. We're also working well ahead of time in piloting, testing, seeing the results. So there's really no surprises. It's that the timing sometimes on these larger complex things, sometimes it takes a few months, sometimes it can take a year, sometimes can take longer, so no real surprises as such.

Okay. I guess how much of that expansion is kind of into AI mobile area?. I mean, if it's small to begin with, do you see that percentage growing bigger towards the later stage of the contract?

Yes. We do see that element, especially on the carrier side, especially that element of AI Estimate-STP. And there was a number of new solutions, some are already established products we had. And then as more customers adopt mobile AI, as well as in some instances existing solutions that they have not rolled out in previous years, they saw the benefit of rolling those solutions out. So it's a mix of new solutions, as well as existing solutions. And some of these solutions will ramp over time as the mix continues to change and more and more AI and other solutions could adopt it.

Thank you. Ladies and gentlemen that concludes our question-and-answer session. I will turn the floor back to Mr. Ramamurthy for any final comments.

Thanks to everybody for joining us and we really appreciate our shareholders being on the call and I look forward to giving you an update. So to wrap up, I'd just tell you that we are thrilled with how CCC performed in 2021, super excited about the opportunities in front of us in '22 and beyond. As we came out to the public markets, we set up some very clear objectives that we wanted to make sure we deliver and hopefully everyone feels good about what we're doing in that area. I would also say that we're seeing positive demand trends across each of our product -- key product and customer segments. And as a result, we are seeing that the importance of investing in cloud-based digital technologies continues to grow among our customers and as we've said and we continue to reiterate, innovation, huge, huge part of what we're doing as we continue to deliver new solutions that help drive growth. And I also want to take this opportunity to wrap up and shout-out a huge thank you to all the CCC'ers who over the years, and particularly, the last year helped make all this happen. So we look forward to giving you further updates and thanks everybody for joining.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.