CCCS - NASDAQ

Greetings and welcome to the CCC Intelligent Solutions First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brian Denyeau from ICR. Please go ahead.

Good afternoon. And thank you for joining us today to CCC’s first quarter 2022 financial results, which we announced in a press release issued after the close of the market today. Joining me on 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 could cause the actual results and implementation of the company's plans to vary materially. These risks are discussed in the earnings release, which is available on our Investor Relations website under the heading Risk Factors and our 2021 annual report on Form 10-K filed with the SEC. Further, these comments and the Q&A that follows are copyrighted today by CCC Intelligent Solutions Holdings Incorporated. Any recording or retransmission, reproduction or other use of the same for profit or otherwise without 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 our transcript. Please note the discussion on today's call include certain non-GAAP financial measures as defined by the SEC. The company believes these non-GAAP financial measures provide useful information of management and investors regarding certain financial and business trends relating to the company's financial condition and 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 strong top and bottom line results in the first quarter. We have solid performance across all parts of our business as customers continue to invest in our solutions to digitize our operations. I'd like to start by summarizing our financial results for the first quarter. Revenue was $186.8 million, up 18% year-over-year and ahead of our guidance range. Adjusted EBITDA was $73.7 million, which grew 33% year-over-year. This represents a 39% margin, up more than 400 basis points from the first quarter of 2021. Our ability to deliver consistent and profitable growth across our business is driven in large part by our ability to solve the most pressing operational problems facing our customers businesses. For them, digital transformation is not a nice to have but critical to their long-term success. Given several challenging macro factors including rising inflation across the ecosystem, labor shortages made worse by increasing levels of retirement and difficulties hiring technical staff who understand vehicle complexity in the tight labor market. And of course, supply chain challenges. We increasingly hear from customers that these challenges are mission critical issues that must be addressed to operate profitably. Adapting their businesses to address these challenges are an important backdrop to what we believe are three key factors driving the digital transformation of the auto insurance economy that will underpin CCC's growth for years to come. First is a need for our customers to deliver a better experience to the consumer. Many of the current processes in the auto insurance economy are inefficient and lead significant room for improvement. These process gaps can drive less than optimal engagement with policyholders and create unnecessary friction among insurers, repair facilities and other industry participants. CCC suite of cloud-based solutions automates insurer rules for many of the critical elements of the claims process. So insurers can focus on the more important tasks and meet the heightened expectations of today's consumer. Second is the benefits of a connected ecosystem, a key to eliminating the friction I just mentioned is to have a truly interconnected and multi-sided network that digitizes key aspects to the claims process. We have built by far the largest connected network in the industry. And one that continues to expand. I will provide some more examples of this a little later. Third is the power of AI to improve and accelerate decision making. CCC has built a data set of more than $1 trillion worth of claims data over decades. We are incorporating AI across our product portfolio to help our customers deliver faster and better decisions across a range of solutions and process steps. CCC is in a unique position to help our customers benefit from these trends as they progress through their digital journeys, our operational and financial performance in the first quarter reflects our success. The core of our ability to deliver these digital solutions to our customers lies in our vision for Straight-Through Processing or STP. STP is a comprehensive approach to the P&C insurance economy that will be made up of many digital and AI solutions that are seamlessly integrated to provide customers, digital solutions throughout the claims process. This modular approach is a great fit with what customers need to digitize their end-to-end claims experience and demonstrates the value of the CCC cloud’s deeply integrated position. Customers tell us they want flexibility and fast time to value throughout the claims handling process. The CCC cloud readily unlocks its capability without the need for costly and time consuming re-platforming. To illustrate how comprehensive the CCC cloud and our STP vision is. I'd like to spend a few minutes walking through at a high level, what a claim journey looks like and how we can add value through each step of the claims workflow. One of the first steps in the auto claims process is to determine whether a vehicle is repairable or not after an accident. We have made significant investments to create a compelling front end experience with our mobile and predictive analytics capabilities that enable insurers to quickly make this determination. Today, our platform is used to determine the repairability of tens of billions of dollars of auto claims annually. For the approximately 80% of claims that are repairable, we have a comprehensive portfolio of solutions that help automate and digitize the repair experience. In recent years, the car park has become increasingly sophisticated with an ever-growing amount of technology embedded in a car like automated cruise control, lane departure warning systems and multiple cameras. This greatly raises the complexity of the repair process. Both insurers and repair facilities need solutions that can provide a consistent repair process, regardless of the auto maker. One way CCC is helping to do this is through CCC diagnostics, which simplifies the process of importing the diagnostic report and provider invoice directly into CCC ONE as part of the repair workflow. We have seen rapid adoption of our diagnostic solutions as customers look to CCC to help solve this challenge. Diagnostic scans, which tell you what is damaged or needs to be reset or recalibrated in a car are seeing explosive growth, scans are up more than 900% since 2017 and are now present on nearly half of all collision repair appraisals. Streamlining this process for repair facilities, including validating the scan with insurer as part of the claim is critically important. On that point, we recently expanded the CCC Diagnostics network with the addition of our partnership with asTech, a global leader in diagnostics, calibration and programming solutions. They went live on the CCC Diagnostics network about a month ago. With the addition of asTech to the CCC network, we now have more than 10% of our repair facility customers utilizing our diagnostic solution. We believe diagnostic spend in the industry exceeds $1 billion today and will be a multiple of that in the coming years. We expect that diagnostics can be at least a $50 million to $100 million revenue opportunity for CCC making it one of the more compelling growth opportunities. For the remaining 20% of claims that are determined not to be repairable. We have developed a comprehensive suite for total loss resolution, which is seeing good momentum in the market. Historically, our total loss products have been focused on helping insurers determine the value of the vehicle but there are also many additional downstream manual processes that need to be completed to finalize a total loss claim, including the processing of title, lien, taxes and fees among others. Each of these represent sizable opportunities for CCC to assist in digitizing. Our total loss care solution is one way insurers can streamline these downstream aspects of the total loss process, including lender payoff requests, letters of guarantee and lien and title resolution. In the 18 months since launch, we now have 21 carriers who are either onboarded or in the pilot process for total loss care. Another example is our fee calculator, which gives insurers the ability to configure upfront the applicable title, registration and license fees in a given jurisdiction and automate their inclusion in the valuation workflow. This saves significant time and reduces manual effort in the total loss claims process. By digitizing the broader total loss process through total loss care, fee calculator and other solutions we believe that more than $1 billion of insurer loss adjustment expense or LAE, which is the cost insurers incur to investigate and settle claims can be impacted annually. Taken together, we believe this represents a sizable incremental revenue opportunity for CCC, the roughly 80/20 split of repair and total loss claims I just covered are what we refer to as automobile physical damage or APD. In addition to APD, unfortunately, auto accidents offer result in medical claims with roughly one in every five incidents having injuries. This is referred to as casualty, and it is a complicated part of the process that represents a significant portion of the total outlays from an insurer in a given year. Casualty is a huge part of the overall auto claims market. To put it in perspective, medical claims payouts are roughly comparable in size to the annual payments made for automobile physical damage claims. Casualty represents a significant opportunity for CCC, where we have substantially less market penetration than in auto physical damage. We have made significant investments to strengthen our casualty offering in recent years to dramatically increase the degree of digitization. We are starting to see good momentum. One example of the investments we've made in our casualty platform is to automate the process of reviewing medical bills based on a customer’s business rules to help ensure determine the bill should be paid directly or sent for exception handling and extra support. These investments are started to pay off. This quarter, we added two new national carriers to our casualty platform. We are excited for the long-term opportunity to add value and casualty, which we believe is ready for digitization. Casualty represents another logical extension of the services we provide to our insurance customers and has good growth potential for CCC. Finally, there are a number of horizontal solutions that work across the entire insurance ecosystem that provides significant value. Payments is a great example and we have some important early success with our new payments integration during the quarter. We signed the first carrier customer for our payments integration and the implementation process is currently underway. We're making good progress on the enablement of multiple use cases, including from carrier to various payees, whether it’s the repair facility, lender, medical facility, or a consumer. We’re pleased with the progress, we’re making on building out the capabilities of our integrations with payment processors and how the pipeline is developing. To remind everyone, payments is not material to our revenue in 2022, but is an exciting future growth opportunity. Subrogation, the process which protects consumers and insurers from paying for losses where the insured is deemed not at fault or only partially at fault is also a sizable opportunity across the claim spectrum. We're making excellent progress with the integration of safety, which is on track from a go-to-market and product integration perspective. Our initial focus is to leverage CCC's existing data to launch a new version of Safekeep solutions quickly and with minimal effort needed on the part of carriers. We have been very encouraged by early customer feedback on this acquisition, which has been consistently positive and has led to a number of new opportunities. In the short time, we have owned safety. As a reminder, Safekeep’s technology helps to automate subrogation a multi-billion dollar area of focus for insurers that has historically leveraged little to no technology to automate the process. We are excited about the opportunity in subrogation and see multiple ways to expand the offering over time. We are looking forward to highlighting all these new innovations when we host our annual industry conference later this month. We're thrilled to once again be hosting this event in person, meeting with customers and partners, discussing key trends shaping the industry and having deep discussions about how CCC can continue to help solve challenges in their businesses. These customer learnings inform our innovation flywheel and enable CCC to continually develop new solutions that increase the value we can deliver. In summary, we see many great opportunities to deliver innovation across our client base, regardless of their size or the breadth of solutions they use from us today. Before I turn the call over to Brian, I want to close by reiterating how pleased we are with the start CCC has gotten off to in 2022. We are raising our outlook for 2022 and are on track to deliver another year of double-digit revenue growth and strong EBITDA margins. We are seeing strong adoption across our product portfolio with both existing and newly introduced solutions. We also continue to expand and strengthen our ecosystem. I believe the investments we're making in talent, innovation and service delivery will help us solve critical problems for our customers as well as deliver consistent growth for years to come. I want to take this opportunity to thank the CCC team for their incredible dedication and to our customers for the tremendous trust they're placing us every single day. I will not turn the call over to Brian, who will walk you through our results.

Thanks Githesh. As Githesh outlined, we feel like we are in a strong position to deliver on the industry's vision for Straight-Through Processing and to deliver exceptional value to our client base. In turn, this will drive durable long-term growth in opportunities to scale with both the more mature products like casualty and the more recent launches like diagnostics, total loss care, payments, and the other solutions that Githesh talked about today. Our existing products provide a long runway for growth. In that if we sold these solutions to our eligible customers, we'd be roughly three times the size we are today. And we also believe these newer solutions that have recently launched add more than another billion dollars in future market opportunities. As the industry continues to digitize, there will be many more organic and inorganic opportunities ahead for us. Now, let me turn to our first quarter 2022 results and provide guidance for the second quarter and the full year of 2022. Total revenue for the first quarter was $186.8 million, up 18% from the prior year period. Our growth is being driven primarily by cross-sell and upsell into our installed client base, including the large expansion deals that we've talked about over the last couple of quarters, which contributed approximately five points of growth. Also the broad base adoption of our new digital solutions, such as mobile AI and Engage, as well as growth from new logos, which is primarily driven from repair facilities and part suppliers. Turning to our key metrics, software gross dollar retention, or GDR captures the amount of revenue retained from our client base compared to the prior year period. In Q1 2022, it was 99% up one point from historical levels. We believe our software GDR reflects the value we provide our customers and the stickiness of the network effect. Software GDR is a core tenant of our predictable and resilient revenue model. Software net dollar retention or NDR captures the amount of cross-sell and upsell from our existing customers compared to the prior year period, as well as volume movements within our auto property damage client base. In Q1 2022, software NDR was 114%. As expected, software NDR remained above our historical range. The consistently strong NDR performance in recent quarters reflects the success we've had with our cross-sell opportunities across our customer base, including the large expansion deals signed in the second half of 2021. NDR is a core driver in our business and we have excellent opportunities to execute against this for the foreseeable future. Now to review the income statement in more detail, as a reminder, unless otherwise noted, all metrics are non-GAAP. And we've provided a reconciliation of GAAP to non-GAAP in our press release. Adjusted gross profit in the quarter was $145.1 million with adjusted gross profit margin of 78% compared to an adjusted gross profit margin of 76% in the first quarter last year. Adjusted gross profit margin benefited from the continued scale in our business in the efficient multi-tenant cloud platform. This is slightly below the 79% adjusted gross profit margin reported last quarter, which benefited a point from the $4 million of non-recurring revenue we spoke about. As we turn to our operating expenses, adjusted operating expenses were $78.2 million, which grew 12% year-over-year. Growth in these expenses were largely driven by headcount additions, public company costs, and the increases in discretionary spend as these expenses continue to normalize. On the headcount addition point, we are pleased with the progress made to advance our operational capabilities by adding key positions across product management, product development, partnerships, and M&A. We feel like we are in a strong position to continue delivering ongoing innovation into the market and execute on our strategic agenda. Adjusted EBITDA for the quarter with $73.7 million, with a 39% adjusted EBITDA margin. Adjusted EBITDA grew 33% year-over-year and margins improved more than 400 basis points, compared to prior year. Margin progression is being driven from scaling revenue, flowing through to EBITDA at high rates as we have an efficient and scalable business model. Now turning to the balance sheet and cash flow, we ended the quarter with $195 million in cash and cash equivalents and $798 million of debt. At the end of the quarter, our net leverage was approximately 2.2 times adjusted EBITDA. Free cash flow in the quarter was $32.6 million, compared to $33.5 million in the prior year period. Looking at cash flow on an unlevered basis, year-to-date, we converted approximately 51% of adjusted EBITDA into unlevered free cash flow. This quarter included the impact of our annual incentive plan payments in finishing the build-out of our new headquarters. Adjusting through these items and on a normalized basis, cash conversion would have been above our historical position in the low to mid-60s. Subsequent to the end of the quarter, we successfully completed a secondary stock offering of 20 million shares by our selling shareholders. CCC did not receive any proceeds from this offering. Now I'd like to finish with guidance beginning in the second quarter. We expect total revenue of $189.5 million to $191.5 million. This represents 14% year-over-year growth at the midpoint, we expect adjusted EBITDA between $69 million to $71 million, which represents a 36% adjusted EBITDA margin at the midpoint. For the full year 2022, we expect revenue of $763 million to $771 million, which is 11% year-over-year growth at the midpoint. We expect adjusted EBITDA between $288 million to $294 million, which represents a 38% of adjusted EBITDA margin at the midpoint. There are a few things to keep in mind, as you think about our guidance for 2022. Our revenue guidance reflects our confidence in the underlying momentum in the business. We will continue to see growth shift more to cross-sell and upsell versus new logos reflecting our growing solution portfolio. And we feel really good about the strategic position and long-term opportunities with straight-through processing, payments and our Safekeep acquisition. However, these will not be meaningful contributors to growth in 2022. Also keep in mind in the second half of this year, we will be lapping the large expansion deals signed in the second half of 2021, as well as the $4 million of non-recurring revenue recorded in the fourth quarter of last year. In terms of profitability, the second quarter includes the impact of cost phasing and our annual industry conference. And we expect to see the impact of continued hiring in key positions across product management and product development to support our growth and innovation roadmap. We do expect profitability to grow sequentially each quarter in the back half of the year. To wrap up, CCC got up to a strong start in 2022 and is well positioned to deliver on our financial and operational targets for the year. The need for digitization across the P&C insurance economy continues to accelerate and CCC is well positioned to drive durable revenue growth in the near and long-term. We are confident that as we continue to execute on our strategic priorities, we will generate significant value for both our customers and our shareholders. With that, operator, we're now ready to take questions. Thank you.

Thank you. So at this time, we will be conducting a question-and-answer session. Our first question is from Dylan Becker from William Blair.

Hey guys. Appreciate you taking the question and a nice job here in the quarter. Maybe I guess, first for you, Githesh, as you think about some of the inflation dynamics that are impacting some of your repair facility customers, insurance carriers, having to navigate and manage that profitability headwind. You've talked a lot about kind of those key platform adjacencies, but how much has that need for better input cost visibility, right, the repair dynamics driven, the accelerated demand you're seeing around the platform expansion and then some of those earlier stage tools like diagnostics and total loss that you've talked about as well.

Yes. Thanks. Couple of things, right, the need for precision to really manage repairs, to manage claims, there's an incredible need to manage precision and to really understand how the supply chain is developing. So we've had tons of requests from customers across our customer base to really understand the analytics, the data, and we publish a crash course. And then of course, for each customer, we provide unique insights into what is going on. So I would say that inflation has clearly been running heavy, also with shortage of labor. So all of these things have really made these mission critical solutions that you can deploy and get very quick ROI, particularly important. So I would not say that, it has accelerated anything in particular, but the long-term secular demand for the products and solutions we have continues to be emphasized pretty heavily by what we're seeing.

Yes. I think that's fair. And obviously adding that, that visibility is the key value driver at the end of the day, I guess if you think about the evolution as well of your overall ecosystem. You've got a lot of the key constituents today. There's also a lot of white space going after the lender dynamic, maybe more on the medical claim side that you talked about as well. There's multiple counterparties involved here, right. So how do you think about the progression of that broader platform expansion and the opportunity to drive value and competitive strength by adding more components to that ecosystem over time as well?

Yes, I would say, you have to think about it in really a couple of dimensions. So when you look at our overall macro view, our overall macro view is our vision of STP or straight-through processing. So from the moment at which claims happen and then end runs all the way through deciding whether it's a total or repair and running all the way through to the end. And then when you look at specific components, each of these has multiple ecosystems. So when you look at repair, you've got repair facilities, you've got parts providers, you've got insurers. When you look at casualty, you've got medical providers, you've got insurers, you've got other parties. When you look at total losses, you've got banks, lienholders. So what we are doing is our vision of STP really involves stitching together a seamless experience across all of these different ecosystems. That's where the power of the network and frankly, years of having delivered solutions to our customers really comes in. Hope that answers your question.

Yes, absolutely. That's fantastic color. Thanks guys and I congrats on the quarter.

Thank you.

Thank you. The next question we have is from Chris Moore from CJS Securities.

Hey, good afternoon guys. Thanks for taking a couple questions. It was very interesting discussion on casualty, had no idea that insurers spent that much there. Are there any unique challenges within the penetration that you're seeking there that could be helped through M&A?

We actually did the M&A a few years ago and we acquired a company years ago and we have actually been investing significantly in the platform over the last several years and have a number of customers. Again, penetration, as I pointed out is significantly less than it is in auto physical damage. But we are – we have several top 20 carriers and we have a number of carriers, but significantly less penetration. And I think as I pointed out, we've added a couple of customers during the quarter as well. And again, stitching all of this together into a seamless experience with straight-through processing, artificial intelligence, all of these capabilities become super important. So yes, we did the M&A a few years back.

And is that from where you are now? Is it kind of a couple years before it's a meaningful contributor to revenue?

Today it's about roughly 10% of our revenue.

Got it. That underrepresented part, I guess, was just in terms of the potential market. So helpful.

Exactly.

And just maybe a little bit more on CCC, you talked about the first carrier. Are there any other kind of specific milestones that you could point to for the balance of 2022 or into 2023 that we should be thinking about?

We have built the business to be quite resilient to any particular event. So if you look at our customer base, right, we've got insurers, we've got parks providers, we've got repair facilities. And I'm assuming, so we've got a broad mix of folks and we are bringing every various products have different milestones, but are you talking Chris specifically about payments?

Yes.

Okay. On payments in particular, yes, we are actually working through four use cases, right. So last year, we said our first goal was to build and get the payments infrastructure in place. We did that. Second, we said we are going to work with early customers to refine use cases and we've been doing that. And then third, we said, look, we're going to get a first customer on board and which is what we just did. And we are continuing to work with a number of cases as again, payments is an important component. So I wouldn't call out any particular, big macro, particular point. And as we pointed out in the call, we do not expect payments to contribute in any meaningful way in 2022.

Understood. Helpful. I'll leave it there. Thanks guys.

Thanks Chris.

Thank you. The next question we have is from Kirk Materne from Evercore ISI. Please go ahead.

Hi guys. This is actually Peter Burkly on for Kirk. So first one, I guess, you guys are doing a lot of innovation. You talked a little bit about diagnostics today. I'm curious, last quarter, we were discussing the Safekeep a little bit and kind of excitement about all the subrogation capabilities and how that can kind of open up more of the P&C insurance economy outside of auto. So I'm just curious, is kind of that outside of auto something you guys are thinking about in terms of future products or your roadmap, even if not near-term, even just later down the line?

Yes. Exactly as you pointed out, subrogation is one of those solutions that extends well beyond auto, subrogation exists in property, exists in workers. It's across a range of solutions. Payments solutions also extends outside of auto as the needs to make payments well outside of auto. So this is what we refer to as when we say horizontal solutions, those are two solutions in particular that extend us beyond auto.

Thanks Githesh. And Brian, maybe one just quick one for you. Last quarter you called out hiring maybe being a little bit behind schedule and that was helping driving some of that margin expansion. And it sounds like hiring is trending pretty nicely in the quarter –this quarter. So I'm just curious, any more color how it's going this quarter and then how you guys are thinking about hiring for the rest of the year here?

Yes. Hey Peter. So we have been making progress across our plans. So we've brought in heads around product development, around product management. We also highlighted that we've invested in some of our partnership capabilities. So we're making additions. We will continue to do that. As we go through the year, we are very focused on balancing investments against our strategic priorities. At the same time, delivering against our long-term margin goals as well. So those are the things we're really focused on balancing but we feel good about the hires that we've made in our operational capabilities as we go forward.

Very helpful. Appreciate the color.

Great. Thanks.

Thank you. The next question we have is from Gabriela Borges from Goldman Sachs.

Hey, thanks for taking the question. This is Jake Titleman on for Gabriela. STP is obviously a key part of the long-term vision. You announced Estimate STP recently. Can you comment in some early success there and then maybe talk about what are the other key technical challenges and innovations that need to be solved to get you closer to a full STP solution down the road?

Sure. Exactly as you pointed out, Estimate STP is a component of our overall STP vision. And I’d argue one of the hardest things in that STP vision to pull off. We have what's been exciting is we announced Estimate STP, I think it was around October of last year. And literally, in the six, seven months since then, we've got eight significant customers up and running on Estimate STP. And this involves very sophisticated AI, very sophisticated workflows, very sophisticated tuning of the AI parameters. And that's also giving us a lot of credibility for STP overall, in fact, been in two conversations with our team, one yesterday and one today with customers exactly around this topic. And so Estimate STP is going well fairly quick adoption. It has significant ROI and fairly quick ROI. And it's also showing the power of how we can – how STP in general, as it extends across the different components of the claim that we talked about as a huge impact. So yes, we are investing many of the people that we are hiring recruiting, the Brian talked about are all around this vision.

Thanks for the color. And just for my follow up, you've talked about growth shifting more toward cross-sell and upsell versus new logos. What are the implications for your unit economics and your margins? Is it fair to assume that the cost of customer acquisition on cross-sell is lower than on new logos?

Yes. Happy to take that. Yes, so we have highlighted this shift. So if you go back and just to give a few data points, so we historically had about two-thirds of the growth was driven from cross-sell/upsell and about a third from new logos. And we've highlighted that that will shift and it will look like more like 80% of the growth coming from cross-sell/upsell and 20% new logos. And we started to see that play out. Second half of last year was more in the 70/30 shift and it's going to continue to move towards that. We do see the opportunity with margin expansion with the ability to sell into our existing base and the efficiency that drives. So we do see that as being a tailwind to margin progression and that's part of what gives us confidence as we look towards the long-term margins that we've highlighted moving from where we are now to the mid-40s over time. So yes, it absolutely is a helpful tailwind. That said today, we don't spend a lot of money on customer acquisitions, we have a very efficient sales organization and have coverage across our customer groups. So although, we see efficiency with the cross-sell, it's not as if today we're spending significant dollars on customer acquisition.

Very clear. Thank you very much for the color.

Yes, absolutely.

Thank you. The next question we have is from Gary Prestopino from Barrington Research.

Hey good afternoon, everyone.

Hey Gary.

Couple of questions here. First of all, on the payment business that you signed, you said you signed one customer. Githesh, you've got one out there that's I assume is working kind of in a beta test with you now?

No, this is a signed customer.

Okay.

We a number of customers that we're working with in the early stages, and this is a customer that we converted over who's we're working on the implementation.

And this would be an insurance carrier?

Yes.

Okay. So in your mind, as you implement this, I mean, how quickly once you implement this and it's out in the market, do you see kind of a cascading effect where something that it becomes, maybe I might have it too, it's necessary for me to have it.

As with many of our other solutions, right. We've been in this business and I think you would know this, having known us for a long time and I look back over the last 20 plus years of driving just growth that is through new solutions. We are very focused on delivering a great experience. When you deliver a great experience in your first product that is really, really – and customer and it really delivers an ROI for a customer that really has a huge impact on how quickly things get adopted. So I’m not going to make any prediction Gary on time and speed, but what we are focused inordinately is delivering a great experience.

Okay. All right. And just a couple of more questions here. What was the software NDR for last year, Brian, do you have that handy?

Yes, so we ended last year at 115, but if you look across the year – last year, it averaged around 113, if you average the four quarters of last year.

Well, I'm talking about for Q1 last year. Was that – I should have been a little bit more precise. Do you have that?

Q1 of last year was 106.

Okay. 106, that's fine. So, all right. And then in terms of things like Engage in electronic parts ordering, I think you said about 30% of your rooftops have got engaged and 40% increased last in Q4 last year of electronic parts ordering. Can you give us an idea of how much more uptake there was in Engage from the repair shops as well as with electronic parts ordering?

Yes, I mean, we made progress on both front, so we continue to sign parts suppliers up and we're seeing growth both from new rooftops of parts suppliers, as well as electronic ordering, just increasing as a percent of overall, what parts are making it on a repair order and we're seeing good progress on Engage and the number of rooftops that we have on Engage. I mean, one of the key drivers, when we look at our NDR and see the strength is Engage in the other digital solutions so mobile AI, Engage, some of their early adoption on the total loss care portfolio. Those are all core drivers of our NDR performance.

Okay, Gary, one other thing – sorry.

It's okay.

No, the one other thing I point out is when you look at Engage, many of our customers have integrated it into their websites and the likes. So now, as customers are trying to book appointments and try to get estimates, it is super helpful to that process. So that word is also spreading pretty broadly. So we expect that Engage will continue to grow over the next couple of years, for sure.

Thanks a lot, guys.

Great. Thanks Gary.

Thank you. Ladies and gentlemen, we have reached the end of our question-and-answer session. And I would like to turn the call back to Githesh Ramamurthy for closing remarks.

Well, thanks everybody for joining us. And again, as we've said before, we believe the industry is in the early stages of digitization, we have terrific credibility with our customers, having delivered a lot of solutions. We're investing in innovation, that's being really well received. And I want to wrap up by saying thanks to all the CCCers who make this possible day in, day out. Thanks very much to our customers who place their trust in us every day and also want to thank our investors for continuing to be a key part of what we do. Look forward to addressing you next quarter.