Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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 CCC Intelligent Solutions Holdings Inc. and its consolidated subsidiaries.

Business Overview

Founded in 1980, CCC provides leading SaaS platforms for the multi-trillion-dollar insurance economy powering operations for insurers, repairers, automakers, part suppliers, and more. CCC cloud technology connects more than 35,000 businesses digitizing mission-critical workflows, commerce, and customer experiences. A trusted leader in artificial intelligence ("AI"), customer experience, network and workflow management, CCC delivers technology that turns crucial moments into intelligent experiences, with the goal of shaping a world where life just works.

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 U.S. beginning in 1992. DRP connects auto insurers and collision repair shops to create business value for both parties, and requires 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 across the claims lifecycle, while building intelligent experiences for their customers. Our software integrates seamlessly with both legacy and modern systems 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 more than 30,500 repair facilities through our multi-tenant cloud platform. We believe our software is the architectural backbone of insurance DRP systems and is a primary driver of material revenue for our collision repair 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, and automotive manufacturers. Our solutions create value for each of these parties by connecting them with 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 $2 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 AI solutions streamline existing insurance and repair processes including vehicle damage detection, claim triage, claim handling, repair estimating, intelligent claim review, and claim subrogation. We deliver real-world AI with more than 100 U.S. auto insurers and more than 10,000 U.S. collision repairers actively using AI-powered solutions in production environments.

One of the primary obstacles facing the insurance economy is increasing complexity which is driven by technological advancements, supply-chain disruption, social inflation, medical inflation, and Internet-of-Things data. We believe digitization plays a critical role in managing this growing complexity while meeting 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 insurance economy of the future with our data, network, and platform.

While our position in the insurance economy is grounded in the automotive insurance sector, the largest property and casualty ("P&C") insurance sector in the U.S. representing nearly half of P&C Direct Written Premium ("DWP"), we believe our integrations and cloud platform are capable of driving innovation across the broader 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, CCC's acquisition of EvolutionIQ, Inc. ("EvolutionIQ") in January 2025 added claims solutions in disability and workers' compensation insurance lines to CCC's solution suite.

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 27 of the top 30 automotive insurance carriers in the U.S., based on DWP, and hundreds of regional carriers. We have more than 35,000 total customers, including more than 30,500 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), more than 6,000 parts suppliers, 13 of the top 15 automotive manufacturers based on new vehicle sales, and numerous other companies that participate in the 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 changes 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 smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and also excludes CCC casualty solutions which are largely usage and professional service based.

Beginning with the quarter ended March 31, 2025, our Software NDR calculation includes EvolutionIQ's software revenue. The new calculation is a result of the acquisition of EvolutionIQ and not the result of a change in the methodology applicable to our pre-acquisition business. The calculation of Software NDR as of and following the quarter ended March 31, 2025 is consistent with the methodology described above, using Software NDR on a combined company basis for the prior year annualized software revenue to determine annualized revenue growth, and, with respect to EvolutionIQ's software revenue, 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 (with shops not applicable to the EvolutionIQ business).

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 smaller emerging solutions with international subsidiaries or other ecosystem solutions, such as parts suppliers and other automotive manufacturers, and excludes CCC casualty solutions which are largely usage and professional service based.

Beginning with the quarter ended March 31, 2025, our Software GDR calculation includes EvolutionIQ's software revenue. The new calculation is a result of the acquisition of EvolutionIQ and not the result of a change in methodology applicable to our pre-acquisition business. The calculation of Software GDR as of and following the quarter ended March 31, 2025 is consistent with the methodology described above, using Software GDR on a combined company basis for the prior year annualized software revenue to determine annualized revenue growth, and, with respect to EvolutionIQ's software revenue 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 (with shops not applicable to the EvolutionIQ business).

Results of Operations

Comparison of the three months ended September 30, 2025 to the three months ended September 30, 2024

Revenues

Revenues increased by $28.6 million to $267.1 million, or 12.0%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The Company's software subscription revenues accounted for $256.7 million and $229.4 million, or 96% of total revenue, during the three months ended September 30, 2025 and 2024.

The increase in revenue was primarily a result of 5% growth from existing customer upgrades and expanding solution offerings to these existing customers, 4% growth from the acquisition of EvolutionIQ, and 3% growth from new customers.

Cost of Revenues

Cost of revenues increased by $19.1 million to $74.1 million, or 34.7%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Cost of Revenues, exclusive of amortization of acquired technologies

Cost of revenues, exclusive of amortization of acquired technologies, increased by $14.9 million to $69.8 million, or 27.1%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was primarily due to a $6.7 million increase in depreciation expense related to additional investments in new and enhanced customer solutions and platform development, and accelerated depreciation due to the discontinuance of an add-on solution. The overall increase was also driven by a $3.8 million increase in information technology ("IT") related costs, a portion of which is related to the EvolutionIQ acquisition, a $2.7 million increase in third party fees and direct costs associated with our revenue growth, and $1.7 million increase in personnel and resource related costs.

Amortization of Acquired Technologies

Amortization of acquired technologies increased $4.2 million to $4.4 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was due to the amortization of new acquired technology recognized as part of the acquisition of EvolutionIQ in January 2025.

Gross Profit

Gross profit increased by $9.6 million to $193.0 million, or 5.2%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. Our gross profit margin was 72.2% for the three months ended September 30, 2025, compared to 76.9% for the three months ended September 30, 2024. The increase in gross profit was due to increased software subscription revenues and economies of scale resulting from fixed cost arrangements, including the impacts from the acquisition of EvolutionIQ in January 2025, partially offset by higher cost of revenue.

Research and Development

Research and development expense increased by $3.4 million to $52.9 million, or 6.9%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was primarily due to a $11.7 million increase in personnel and resource related costs, including a $1.6 million increase in stock-based compensation, primarily due to the acquisition of EvolutionIQ in January 2025, partially offset by a $5.6 million decrease in information technology ("IT") related costs, and $2.5 million increase in the amount of capitalized time on platform and customer solution enhancements.

Selling and Marketing

Selling and marketing expense increased by $9.9 million to $44.2 million, or 28.7%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was due to an $7.4 million increase in personnel-related costs, including a $4.3 million increase in stock-based compensation, primarily due to the acquisition of EvolutionIQ in January 2025, and a $2.1 million increase in professional service costs.

General and Administrative

General and administrative expense decreased by $5.6 million to $47.3 million, or 10.6%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The decrease was primarily due to a $8.6 million decrease in stock-based compensation, and a $1.7 decrease in professional service costs, partially offset by a $1.9 million increase in personnel-related costs and a $1.2 million increase in other business taxes.

Amortization of Intangible Assets

Amortization of intangible assets was $18.5 million and $17.9 million for the three months ended September 30, 2025 and 2024, respectively. The increase in amortization of intangible assets was due to the intangible assets recognized as part of the acquisition of EvolutionIQ in January 2025.

Interest Expense

Interest expense increased by $1.7 million to $18.1 million, or 10.5%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was due to the additional interest incurred on the Promissory Note payable by CCC Cayman and its subsidiaries to a minority investor and the interest incurred on an additional $225.0 million term loan as part of the third amendment to the 2021 Credit Agreement, entered into in January 2025, partially offset by lower variable interest rates during the three months ended September 30, 2025.

Interest Income

Interest income decreased by $2.3 million to $1.1 million, or 68.1%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, mainly due to lower average balances on interest earning deposits and money market funds during the three months ended September 30, 2025.

Change in Fair Value of Warrant Liabilities

Due to the redemption of all outstanding warrants in May 2024, the Company did not recognize any income or expense as a change in fair value of warrant liabilities during the three months ended September 30, 2025 and three months ended September 30, 2024.

Other Income (Expense)-Net

We recognized other income (expense)-Net of $0.5 million for the three months ended September 30, 2025 compared to other expense-Net of $2.6 million for the three months ended September 30, 2024. The change during the three months ended September 30, 2025 was primarily due to the change in fair value and decrease in income of derivative instruments, driven by the change in forward curve and secured overnight financing rate ("SOFR").

Income Tax Provision

The Company recognized an income tax provision of $15.4 million and $8.9 million for the three months ended September 30, 2025 and 2024, respectively. The income tax provision during the three months ended September 30, 2025 was primarily due to the Company's year-to-date pre-tax book income, as well as the tax impact related to stock-based compensation expense, partially offset by the tax impact related to estimated research and development credits.

Comparison of the nine months ended September 30, 2025 to the nine months ended September 30, 2024

Revenues

Revenues increased by $80.8 million to $779.1 million, or 11.6%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The Company's software subscription revenues accounted for $749.8 million and $670.3 million, or 96% of total revenue during the nine months ended September 30, 2025 and 2024.

The increase in revenue was primarily a result of 5% growth from existing customer upgrades and expanding solution offerings to these existing customers, 4% growth from the acquisition of EvolutionIQ, and 3% growth from new customers.

Cost of Revenues

Cost of revenues increased by $37.4 million to $207.2 million, or 22.0%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Cost of Revenues, exclusive of amortization of acquired technologies

Cost of revenues, exclusive of amortization of acquired technologies, increased by $33.1 million to $194.1 million, or 20.6%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily due to a $14.6 million increase in depreciation expense related to additional investments in new and enhanced customer solutions and platform development, and accelerated depreciation due to the discontinuance of an add-on solution. The overall increase was also driven by a $7.4 million increase in personnel-related costs, including a $1.9 million increase in stock-based compensation partially due to the acquisition of EvolutionIQ in January 2025, a $6.0 million increase in third party fees and direct costs associated with our revenue growth, and a $5.9 million increase in IT related costs.

Amortization of Acquired Technologies

Amortization of acquired technologies was $13.1 million for the nine months ended September 30, 2025 and 2024. The amortization recognized on acquired technologies as part of the acquisition of EvolutionIQ in January 2025 was offset by certain acquired technology intangible assets reaching the end of their useful life in April 2024.

Gross Profit

Gross profit increased by $43.4 million to $572.0 million, or 8.2%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. Our gross profit margin was 73.4% for the nine months ended September 30, 2025, compared to 75.7% for the nine months ended September 30, 2024. The increase in gross profit was due to increased software subscription revenues and economies of scale resulting from fixed cost arrangements, including the impacts from the acquisition of EvolutionIQ in January 2025, partially offset by higher cost of revenue.

Research and Development

Research and development expense increased by $26.4 million to $174.6 million, or 17.8%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The increase was primarily due to a $38.4 million increase in personnel and resource related costs, including a $11.1 million increase in stock-based compensation, primarily due to the acquisition of EvolutionIQ in January 2025, partially offset by a $8.2 million decrease in IT related costs, a $3.0 million increase in the amount of capitalized time on platform and customer solution enhancements, and $0.7 million decrease in professional service costs.

Selling and Marketing

Selling and marketing expense increased by $29.7 million to $136.0 million, or 28.0%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The increase was primarily due to a $25.9 million increase in personnel-related costs, including a $17.4 million increase in stock-based compensation, primarily due to the acquisition of EvolutionIQ in January 2025, and a $2.4 million increase in professional service costs.

General and Administrative

General and administrative expense increased by $0.8 million to $162.1 million, or 0.5%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The increase was primarily due to a $5.7 million increase in professional service costs, mainly due to the acquisition of EvolutionIQ in January 2025, a $1.0 million increase in other business taxes, and a $1.0 million increase in IT related costs, partially offset by a $7.0 million decrease in personal-related costs, including a $11.4 million decrease in stock-based compensation.

Amortization of Intangible Assets

Amortization of intangible assets was $55.5 million and $53.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Interest Expense

Interest expense increased by $3.4 million to $52.9 million, or 6.9%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The increase was due to the additional interest incurred on the Promissory Note payable by CCC Cayman and its subsidiaries to a minority investor and the interest incurred on an additional $225.0 million term loan as part of the third amendment to the 2021 Credit Agreement, entered into in January 2025, partially offset by lower variable interest rates during the nine months ended September 30, 2025.

Interest Income

Interest income decreased by $4.2 million to $4.2 million, or 49.8%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, due to lower average balances on interest earning deposits and money market funds during the nine months ended September 30, 2025.

Change in Fair Value of Warrant Liabilities

Due to the redemption of all outstanding warrants in May 2024, the Company did not recognize any income or expense as a change in fair value of warrant liabilities during the nine months ended September 30, 2025. We recognized income of $14.4 million for the nine months ended September 30, 2024. The change in fair value of warrant liabilities during the nine months ended September 30, 2024 was primarily due to changes in the price of the Company's common stock during the reporting period.

Other (Expense) Income-Net

We recognized other expense of $6.7 million for the nine months ended September 30, 2025 compared to other income $1.6 million for the nine months ended September 30, 2024. The change during the nine months ended September 30, 2025 was primarily due to the change in fair value and decrease in income of derivative instruments, driven by the change in forward curve and SOFR.

Income Tax Benefit (Provision)

The Company recognized an income tax benefit of $5.1 million and an income tax provision of $9.0 million for the nine months ended September 30, 2025 and 2024, respectively. The income tax benefit during the nine months ended September 30, 2025 was primarily due to Company's pre-tax book loss, as well as the tax rate impact of non-deductible stock-based compensation expense.

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 of acquired technologies 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 months ended September 30, 2025 and 2024:

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 of intangible assets, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential mergers and acquisitions ("M&A"), costs related to equity transactions, including secondary offerings, litigation proceeds and litigation costs for matters in which we are the plaintiff and related antitrust matters and debt refinancing costs.

The following table reconciles operating expenses to Adjusted Operating Expenses for the three and nine months ended September 30, 2025 and 2024:

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 income adjusted for amortization of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, costs related to equity transactions, including secondary offerings, litigation proceeds and litigation costs for matters in which we are the plaintiff and related antitrust matters and debt refinancing costs.

The following table reconciles operating income to Adjusted Operating Income for the three and nine months ended September 30, 2025 and 2024:

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, amortization of intangible assets and acquired technologies, depreciation, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, costs related to equity transactions, including secondary offerings, litigation proceeds and litigation costs for matters in which we are the plaintiff and related antitrust matters, debt refinancing costs, change in fair value of derivative instruments, income from derivative instruments and change in fair value of warrant liabilities. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.

The following table reconciles net (loss) income to Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024:

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 income (loss) adjusted for the after-tax effects of amortization of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, costs related to equity transactions, including secondary offerings, litigation proceeds and litigation costs for matters in which we are the plaintiff and related antitrust matters, debt refinancing costs, change in fair value of derivative instruments, and change in fair value of warrant liabilities.

The following table reconciles net (loss) income to Adjusted Net Income and Adjusted Earnings Per Share for the three and nine months ended September 30, 2025 and 2024:

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.

The following table reconciles net cash provided by operating activities to Free Cash Flow for the three and nine months ended September 30, 2025 and 2024:

Liquidity and Capital Resources

We have financed our operations with cash flows from operations. The Company generated $196.3 million of cash flows from operating activities during the nine months ended September 30, 2025. As of September 30, 2025, the Company had cash and cash equivalents of $97.1 million, a working capital surplus of $112.6 million and an accumulated deficit totaling $1,319.1 million. As of September 30, 2025, the Company had $993.5 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 (as amended, the "2021 Credit Agreement").

The 2021 Credit Agreement originally consisted of an $800.0 million term loan, the proceeds of which, with cash on hand, were used to repay all outstanding borrowings under the Company's previous credit agreement.

On January 6, 2025, in conjunction with the acquisition of EvolutionIQ, the Company entered into the third amendment to the 2021 Credit Agreement (the "Third Amendment") that provided the Company with incremental term loans in an aggregate principal amount of $225.0 million (the "Incremental Term Loans"). Prior to the Fourth Amendment (as defined below) the Incremental Term Loans were repayable in quarterly installments in an amount equal to 0.25% of the original principal amount, with the balance payable at maturity, September 21, 2028.

Prior to the Fourth Amendment, the interest rate per annum applicable to the Incremental Term Loans were based on a fluctuating rate of interest, determined by the Company's leverage ratio, as defined in the 2021 Credit Agreement. In connection with the Fourth Amendment, the Incremental Term Loans were refinanced together with other term loans outlined in the following paragraphs.

On January 23, 2025, the Company entered into the fourth amendment (the "Fourth Amendment" and together with the Third Amendment, the "Amendments") to the 2021 Credit Agreement.

Pursuant to the terms of the Fourth Amendment, the Company incurred incremental term loans in an aggregate principal amount of $225.0 million, which were used to (i) refinance certain outstanding incremental term loans (including the Incremental Term Loans), (ii) extend the maturity of all term loans to January 23, 2032, (iii) remove the credit spread adjustment applicable to SOFR loans, and (iv) reduce the interest rate margin applicable to all term loans.

All other terms and conditions within the Company's 2021 Credit Agreement were unchanged as part of the Amendments.

Upon execution of the Fourth Amendment, the Company had outstanding borrowings under a term loan of $1,001 million (the "Term 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 Loan, the "2021 Credit Facilities"). The 2021 Revolving Credit Facility has a sublimit of $75.0 million for letters of credit.

The Company incurred $3.8 million in costs related to the Amendments, recorded as contra-debt. These costs are being amortized to interest expense over the term of the Term Loan using the effective interest method.

The Term Loan requires quarterly principal payments of approximately $2.5 million until December 31, 2031, with the remaining outstanding principal amount required to be paid on the maturity date. If the Company's leverage ratio, as defined in the 2021 Credit Agreement is greater than 3.5, the Term 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 December 31, 2024, the Company's leverage ratio did not exceed the 3.5 threshold and the Company was not subject to the annual excess cash flow calculation, and as such, not required to make a prepayment of principal.

As of September 30, 2025 and December 31, 2024, the amount outstanding on the Term Loan was $993.5 million and $776.0 million, respectively. As of September 30, 2025 and December 31, 2024, $10.0 million and $8.0 million, respectively, was classified as current in the accompanying condensed consolidated balance sheets.

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

Pursuant to the Fourth Amendment, the interest rate per annum applicable to the Term Loan is 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) 1.00% in the case of base rate loans, and 2.00%, in the case of SOFR (or the Euro Interbank Offer Rate ("EURIBOR") or the Sterling Overnight Indexed Average ("SONIA")) loans, if S&P and Moody's Debt First Lien Leverage Ratio Ratings (as defined in the Credit Agreement) are below BB- (with a stable outlook) or below Ba3 (with a stable outlook) (or if for any reason this category does not apply, including if the Borrower has only one Debt Rating or the Borrower does not have any Debt Rating), and

(2) 0.75%, in the case of base rate loans, and 1.75%, in the case of SOFR (or EURIBOR or SONIA) loans, if S&P and Moody's Debt First Lien Leverage Ratio Ratings are both BB- (with a stable outlook) or better and Ba3 (with a stable outlook) or better.

Prior to the Amendments, 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 (or EURIBOR or 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).

In September 2024, the Company entered into Amendment No. 2 to the 2021 Credit Agreement (the "Second Amendment") to (i) remove the SOFR credit adjustment applicable to the 2021 Revolving Credit Facility and (ii) reduce the applicable interest rate for the 2021 Revolving Credit Facility by 0.25%. Additionally, the maturity date for the 2021 Revolving Credit Facility was extended to September 23, 2029.

At the time of entering into the 2021 Credit Agreement, the Company incurred $3.1 million in financing costs related to the 2021 Revolving Credit Facility. The Company incurred $0.7 million in financing costs related to the Second Amendment. 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. As of September 30, 2025 and December 31, 2024, the deferred financing fees asset balance was $1.5 million and $1.7 million, respectively.

A quarterly commitment fee of up to 0.50% is payable on the unused portion of the 2021 Revolving Credit Facility.

During the three months ended September 30, 2025 and 2024, the weighted-average interest rate on the outstanding borrowings under the Term Loan was 6.4% and 7.8%, respectively.

During the nine months ended September 30, 2025 and 2024, the weighted-average interest rate on the outstanding borrowings under the Term Loan was 6.3% and 7.8%, respectively.

As of September 30, 2025 and December 31, 2024, the Company has outstanding standby letters of credit for $1.1 million and $0.7 million, respectively, which reduce the amount available to be borrowed under the 2021 Revolving Credit Facility. As of September 30, 2025 and December 31, 2024, $248.9 million and $249.3 million, respectively, was available to be borrowed.

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 of the Company, the leverage ratio of CCC Intelligent Solutions Inc. and certain of its subsidiaries cannot exceed 6.25 to 1.00. Borrowings under the 2021 Revolving Credit Facility did not exceed 35% of the aggregate commitments and the Company was not subject to the leverage test as of September 30, 2025 or December 31, 2024.

Interest Rate Swaps-In February 2025, the Company entered into three interest rate swap agreements (the "Swaps") to reduce its exposure to variability from future cash flows resulting from interest rate risk related to its floating rate long-term debt. Pursuant to the terms of the Swaps, beginning on July 31, 2025, the Company will pay an average fixed interest rate of 3.94% on an aggregate notional amount corresponding to borrowings of $750.0 million in exchange for receipts on the same notional amount at a floating interest rate based on the applicable SOFR at the time of payment. The Swaps expire on July 31, 2027.

Cash Flows

The following table provides a summary of cash flow data for the nine months ended September 30, 2025 and 2024:

Net cash provided by operating activities was $196.3 million for the nine months ended September 30, 2025. Net cash provided by operating activities consists of net income of $6.4 million, adjusted for $269.5 million of non-cash items, ($60.6) million for changes in working capital and ($6.1) million for the effect of changes in other operating assets and liabilities. Significant non-cash adjustments include stock-based compensation expense of $146.2 million, depreciation and amortization of $113.0 million and a change in fair value of derivative instruments of $8.4 million, partially offset by deferred income taxes of $1.2 million. The change in working capital was primarily the result of a change in income taxes of $30.7 million due to timing of payments, an increase in

accounts receivable of $33.7 million, and a decrease in accrued expenses of $6.7 million due to employee incentive plan payments, partially offset by an increase in deferred revenue of $10.1 million.

Net cash used in investing activities was $457.1 million for the nine months ended September 30, 2025. Net cash used in investing activities was due to $410.4 million used for the acquisition of EvolutionIQ and $46.7 million of capitalized internally developed software projects and purchases of software, equipment, and property.

Net cash used by financing activities was $41.2 million for the nine months ended September 30, 2025. Net cash used by financing activities was primarily due to $212.5 million for a repurchase of common stock, $48.3 million of payments for employee tax liabilities related to the net share settlement of employee equity awards, $6.6 million of payments for fees associated with a debt modification and $7.5 million of principal payments of long-term debt, partially offset by $225.0 million of an incremental term loan used for the acquisition of EvolutionIQ, $5.0 million of proceeds from the issuance of stock under the employee stock purchase plan, and $3.6 million of proceeds from stock option exercises.

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, 2024 in our Annual Report on Form 10-K.

Business Combinations

The results of a business acquired in a business combination are included in our condensed consolidated financial statements as of the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business being recorded at their estimated fair values on the acquisition date, which may be considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill.

We perform valuations of assets acquired and liabilities assumed and allocate the purchase price to the respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed requires significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, royalty rates, and selection of comparable companies. We engage third-party valuation specialists to assist in concluding on fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination. The resulting fair values and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.

These estimates are inherently uncertain and unpredictable, and if different estimates were used the purchase price for the acquisition could be allocated to the acquired assets and liabilities differently from the allocation that we have made. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates, and if such events occur, we may be required to record a charge against the value ascribed to an acquired asset, an increase in the amounts recorded for assumed liabilities, or an impairment of some or all of the goodwill.

Goodwill and intangible assets recognized in connection with our acquisition of EvolutionIQ in January 2025 was $538.8 million and $167.9 million, respectively.

There have been no other 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, 2024, included in our Annual Report on Form 10-K.