CCCS - NASDAQ

Good day, and thank you for standing by. Welcome to the CCC Intelligent Solutions First Quarter Fiscal 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Bill Warmington, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and thank you, all, for joining us today to review CCC's first quarter 2025 financial results, which we announced in the press release issued before the opening of the market today. Joining me on the call 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 may cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the earnings releases available on our Investor Relations website and under the heading Risk Factors in our 2024 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, retransmission or 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 will provide a transcript of portions of this call and we've approved the publishing of a transcript of this call by a third-party, we take no responsibility for inaccuracies that may appear in the transcripts. 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 on our earnings release that is available on our Investor Relations website. Thank you, and now I'll turn the call over to Githesh.

Thank you, Bill, and thanks to all of you for joining us today. I'm pleased to report a solid start to 2025. CCC delivered another quarter of strong top and bottom line results, reflecting the predictability and profitability of our business. In the first quarter of 2025, CCC's total revenue was $252 million, growing 11% year-over-year, exceeding our guidance range and crossing the $1 billion revenue run rate threshold for the first time. Adjusted EBITDA was $99 million, also ahead of our guidance range and adjusted EBITDA margin was 39%. On today's call, I would like to cover three themes. The first is how we help our clients manage complexity in an increasingly uncertain world. The second is how our clients are increasingly committing to CCC, as their core long-term innovation platform. And third, the continued progress and proof points in adoption of our newer solutions. In terms of my first topic, you heard me speak on prior calls about the many operational challenges that rising complexity pauses for our customers. There are numerous examples of this, including growing vehicle complexity, labor and skill shortages, medical cost inflation, natural disasters, changing regulations and more. Fundamentally, our solutions help our customers navigate these complexities, so they can efficiently operate and grow their businesses and provide a seamless consumer experience. We do this by leveraging real-time hyper-local data, a highly interconnected ecosystem and deeply integrated AI-powered workflows powering our customers' operations. We also maintain an intense focus on customer engagement, so we can advise our customers on the latest trends. A good illustration of this is the current macroeconomic environment. For example, while each customer is unique, they all share a common challenge in navigating the increased complexity arising from heightened volatility and uncertainty in vehicle and parts pricing and availability. Our recent client meeting show that there's an even greater intensity with which they are seeking tools, data and insights to help them effectively manage these rapidly changing variables that impact the near and long-term decisions and operations. We believe CCC is uniquely able to deliver this support. That starts by providing visibility to real-time hyper-local data on fluctuating prices, parts availability, used vehicle values and many other decision inputs across the entire country and even down to a single claim. Using that intelligence, customers can use our platform to rapidly and flexibly shift their operations with their partners in the CCC ecosystem staying in sync. And they can do this in line with their existing systems and operations with AI-enabled workflows driving increased efficiency and productivity, so they can stay ahead of the curve. And through our unique industry-wide benchmarking data, we can make sure they really are. This dynamic creates a virtuous cycle where increased customer collaboration drives demand for additional solutions and is just one example of how we're helping our customers to navigate the increasing complexity in the insurance economy. Another is the ongoing economic sensitivity of the U.S. consumer and the cumulative impact of inflation, which has contributed to a more than 50% increase in auto insurance premiums since March of 2020. Across multiple dimensions, we have seen consumers seek to lower their costs and avoid potential future rate increases. They are raising deductibles and reducing coverage. Smaller claims are going unfiled and insurance shopping is up. This puts even more pressure on insurers and repairs to deliver a modern, best-in-class customer experience, but also creates the risk of unrelated prior damage showing up in future claims and repairs. Both areas that we believe CCC is uniquely positioned to address. These factors combined with falling consumer confidence overall, contributed to a continued decline in filed auto physical damage or APD claims in Q1, down 9% year-over-year. As Brian will discuss shortly, we expect this dynamic to keep claim volumes under pressure for the remainder of 2025. While this will have a modest near-term impact on our revenue, we have seen this pattern of up and down fluctuation followed by normalization play out in various forms over the past two decades. My second theme is how our clients are increasingly committing to CCC as their core long-term innovation platform. This is leading to continued strength and growth opportunities in our established solutions. For multiple decades, we have invested ahead of the technology curve to drive innovation in our market-leading solutions. Our core established products deliver proven bottom-line results that customers rely on as the basis for their claims and repair operations. These solutions have significant white space for growth, and importantly, form a seamless, highly scalable foundation for our emerging products. Clients are increasingly demonstrating their trust in CCC as their long-term innovation platform because of the strength of our established solutions and the gateway they provide to additional next-generation capabilities. The renewal and expansion of our long-term contract with Caliber Collision last month is a good example of our strategic role within the auto insurance economy and how our core established solutions continue to create growth opportunities for both CCC and our clients. Since its founding in 1997, Caliber has been very forward thinking in its application of new technologies and was an early adopter of CCC's workflow and direct repair solutions. Caliber is the largest multi-store operator in the United States with over 1,800 locations across 41 states and on a strong growth trajectory. Caliber has been a terrific partner and we are excited to provide them with additional capabilities to support their future growth. In addition to extending their overall use of the CCC ONE platform, Caliber will also be adding CCC Diagnostics Workflow and CCC Build Sheets to help streamline operations and enhance services across its repair facilities. In Q1, we also signed a large new account, an OEM with a captive insurance business and a leading market position in EVs. It's important to note that this new relationship is with both the insurance and the collision repair sides of the business, reflecting the value of our multisided network. We think this OEM's decision to embrace CCC as its long-term innovation platform by rolling out our core solutions is significant because it is a proof point that new disruptive business models are choosing to partner with us due to the strength and functionality of the CCC platform. In addition to the use of our tools in its captive insurance operation, this OEM also has several hundred repair facilities in its certified repair program. We believe the Caliber renewal and the OEM win demonstrate the continued foundational value of CCC solutions for leading industry players and the long runway for growth of our core solutions in our existing markets. Within insurance overall, we completed multiple renewals and expansions with existing clients in auto physical damage, along with multiple new contracts and renewals in casualty in the first quarter. We continue to believe casualty is one of our biggest growth opportunities with the potential to be multiple times its current size and over time, possibly as large or even larger than our current insurance APD business. Casualty costs are climbing across the board and outpacing general health care costs due to notable increases in outpatient surgeries and diagnostic procedures such as CT scans and MRIs. Our platform as well as the insights and connectivity to the physical damage side of the accident only CCC can deliver provide unique capabilities to help our customers manage these complexities. We also continue to see durable expansion and growth in our automotive business as we continue to add new repair facilities and expand the depth of our CCC ONE cross-sell. The volume of electronic parts ordering through CCC ONE is also continuing to rise with 10% year-over-year growth in the first quarter with a significant remaining portion of order volume yet to be converted. My third theme is the continued progress and proof points in the adoption of our new solutions. In addition to strong ongoing demand for our established solutions, we continue to see solid demand and progress in the adoption of our newer solutions that reinforces our confidence in the market opportunity for these new products. We have multiple top 20 insurers seeing significant improvements in their operating efficiency using our intelligent APD suite and also have multiple top 20 insurers starting to generate revenue using our AI-powered subrogation solution. Now moving to Evolution IQ. The integration of our newest AI-powered business is going well. When we announced the acquisition in December, a key part of our investment thesis was the opportunity to add Evolution IQ's AI-powered injury claims resolution capabilities to our auto casualty suite, positioning us to build on our already strong momentum in casualty. Last week, due to the tremendous dedication and collaboration of our teams since the acquisition, we are pleased to announce the faster-than-expected introduction of MedHub for auto casualty, which we plan to launch in the third quarter. MedHub will be integrated into CCC's Casualty suite of solutions with the aim of providing faster, better informed claims decisions and is the first of several planned innovations with EvolutionIQ. MedHub is EvolutionIQ's AI-powered medical synthesis technology that is able to help claims professionals make sense of complex medical documentation. MedHub has built an impressive track record of success in other lines of insurance with customers reporting more efficient review processes, more accurate summarization output and better targeted use of specialists on claims AI-powered medical record synthesis is particularly well suited to third-party casualty because casualty insurers typically receive a large demand package including hundreds or even thousands of pages with continuous updates and a given claim professional may be juggling hundreds of such claims. We believe that by leveraging EvolutionIQ's AI-based technologies in medical summarization and in the future best next action recommendation engine, we can deliver a step change impact in Casualty the way we have in auto fiscal damage and EvolutionIQ has in disability. EvolutionIQ continues to see strong momentum in its core disability business and is also seeing robust adoption of its workers' compensation suite. seven of the top 10 workers' compensation, P&C insurers are also existing CCC auto insurance clients, and we believe those existing relationships, combined with the bottom line results EvolutionIQ's workers' compensation customers are experiencing provide another large and attractive runway for growth. Let me conclude by saying that we are excited about the opportunity to help our clients navigate the rising complexity in their business and by their growing commitment to CCC as their core innovation platform for established and emerging solutions. We remain confident that the global insurance economy is still at the early stages of a generational digital upgrade cycle and that CCC is well positioned to help our customers navigate this transition. I will now turn the call over to Brian will walk you through our results in more detail.

Thanks, Githesh. As Githesh highlighted, Q1 was a solid start to the year that included significant renewals, contract expansions and new logo wins, reflecting positive momentum in the core business as well as our newer solutions. Now let's turn to the numbers. I'd like to review our first quarter 2025 results and then provide guidance for the second quarter and the full year of 2025. Total revenue in the first quarter was $251.6 million, which is up 10.7% from the prior year period. In the first quarter of 2025, approximately 4 percentage points of growth was driven from cross-sell, upsell and the adoption of solutions across our client base, including repair shop upgrades, the continued adoption of our emerging solutions, casualty and other ecosystem customers. Approximately three points of growth came from new logos, mostly from repair facilities and parts suppliers. About 4% to growth came from EvolutionIQ. In the quarter, contribution from Emerging Solutions is now rounding up to two points of growth, mainly driven from diagnostics, build sheets and Estimate STP. Emerging Solutions represent about four percentage points of our total revenue in Q1 of 2025, and these solutions continue to be the fastest-growing portion of our portfolio. This solid performance was despite approximately one percentage point of headwind from lower claim volumes in Q1. [indiscernible] to our key metrics of software gross dollar retention or GDR and suffer from net dollar retention NDR, please note that both these metrics now include EvolutionIQ. We are using an annualized software revenue on a combined basis for the prior year to provide a prior year baseline for annualized revenue growth. GDR captures the amount of revenue retained from our client base compared to the prior year period. In Q1 2025, our GDR was 99%, which is in line with the last five quarters. Note that since the first quarter of 2020, our GDR has been between 98% and 99% and it has either rounded up or down, primarily driven by repair shop industry churn. We believe that GDR reflects the value we provide and the significant benefits that accrue to our customers from participating in the broader CCC network, our strong GDR is a core tenet to our predictable and resilient revenue model. NDR captures the amount of cross-sell, upsell from our existing customers compared to the prior year period, as well as volume movements in our auto physical damage client base. In Q1, 2025, our NDR was 107. This is up from 105 in Q4 2024. EvolutionIQ contributed almost two points to NDR in the quarter. Now, I'd like to turn to the income statement in more detail. As a reminder, unless otherwise noted, all metrics are non-GAAP. We provided a reconciliation to GAAP and non-GAAP in our press release. Adjusted gross profit in the quarter was $192 million. Gross profit margin was 77%, which is up from 76% last quarter and down slightly from 78% in Q1 2024. The lower adjusted gross profit margin versus Q1 of 2024 primarily reflects increase in depreciation expense from capitalized projects recently put into service. This was partially offset by modest accretion from EvolutionIQ. Overall, we feel good about the operating leverage and the scalability of the business and our ability to deliver against our long-term adjusted gross profit margin target of 80%. In terms of expenses, adjusted operating expense in Q1 2025 was $107 million, which is up 15% year-over-year, primarily driven by resource related costs, including the addition of EvolutionIQ. Excluding EvolutionIQ, adjusted operating expense was up 6% year-over-year. Adjusted EBITDA for the quarter was $99 million, up 6% year-over-year with an adjusted EBITDA margin of 39%. Now, turning to the balance sheet and cash flow. We ended the quarter with $130 million in cash and cash equivalents and about $1 billion of debt at the end of the quarter, our net leverage was 2.2 times adjusted EBITDA. Free cash flow in Q1 was $44 million compared to $40 million in the prior year period, which is up 10% year-over-year, including modest dilution related to transaction costs associated with the EvolutionIQ acquisition. Free cash flow on a trailing 12-month basis was $235 million, which is up 9% year-over-year. Our trailing 12-month free cash flow margin in Q1 2025 was 24%, consistent with Q1 of 2024, while our free cash flow level will vary quarter-to-quarter. We do expect this to continue to trend up over time. As far as use of free cash flow, I did want to highlight that we repurchased seven million shares of CCC stock for $72 million in Q1 under our previously announced $300 million share repurchase program. I'll now cover guidance beginning in Q2 2025. We expect revenue of $255.5 million to $257.5 million, which represents 10% to 11% growth year-over-year. We expect adjusted EBITDA of $99 million to $101 million, a 39% adjusted EBITDA margin at the midpoint. For the full year 2025, we are modestly reducing our full year outlook. We are now expecting total revenue of $1.046 billion to $1.056 billion, which is 11% year-over-year growth at the midpoint. We expect CCC's core revenue growth in the year to remain at the low end of our long-term guidance of 7% to 10% and for EvolutionIQ to contribute between $45 million and $50 million in revenue in 2025, which is consistent with what we discussed when we announced the transaction back in December. For adjusted EBITDA, we expect $420 million to $428 million, a 40% adjusted EBITDA margin at the midpoint, which includes absorbing a moderate EBITDA loss from EvolutionIQ. So three points you keep in mind as you think about the Q2 and full year guidance for 2025. The first point is that uncertainty in the current macroeconomic environment is creating two potential moderate near-term headwinds for the business, one coming from claim volumes and the second client buying behavior. As Githesh mentioned earlier in his remarks, we believe that consumer economic sensitivity is impacting auto insurance claim volumes. About 20% of our revenue is tied to volumes, though the direct revenue impact can vary depending on solution and client mix. From a sales perspective, we continue to see strong demand momentum in our solution set, as Githesh referenced earlier, at the same time, we believe the increased uncertainty related to the evolving macroeconomic -- makes it prudent to assume that sales and implementation cycles in 2025 may be longer than initially expected. The combination of these two factors have led us to reduce our 2025 revenue growth guidance by about one percentage point. The second point is that we've raised our full year 2025 adjusted EBIT guidance midpoint from $422 million to $424 million and increased our EBITDA margin guidance from 39% to 40% to 40% to 41%. Excluding the approximately 200 basis point drag from EvolutionIQ margin, expansion for CCC is tracking towards our year-over-year target of 100 basis points. We remain focused on investing in innovation and also driving operational efficiency that will drive margin progression over time as we continue to feel good about our long-term margin target. Third point is stock-based compensation. In Q1, stock-based compensation was 24% of revenue. As we unpack this figure, there are three component parts of it. The first is CCC vesting shares, which are expected to be about 12% of revenue for the year. This is coming down from 18% in 2024. The second is the new shares granted to EvolutionIQ as part of the transaction. We believe this grant was important strategically for retention and alignment and creating long-term value for shareholders. For the year, this is about 3% of revenue. These two items make up the 15% stock-based comp as a percentage of revenue for the full year that we highlighted on our last call. The third component relates to acquisition consideration. Some of the equity from the transaction for key EvolutionIQ management is on a vesting schedule linked to employment over a two-year period. Within this structure, a portion of the equity is being treated as compensation and not purchase price. As a result, the purchase price is $46 million lower than we previously talked about, and share-based comp is $46 million higher, which increases share-based comp as a percent of revenue by 2-percentage points per year for the next two years. This takes the full year position for 2025 to approximately 17%. The phasing of 17% is front loaded with a peak of 24% in Q1 and then it moderates through the year and reaching the low-teens by the end of the year. While the current macroeconomic environment is creating some near-term uncertainties, we believe, ultimately, it reinforces how we can assist our customers with their digital transformation and AI-based solutions. As we help our clients navigate these complexities, we remain confident in our business model and our ability to deliver against our long-term strategic priorities, and to create long-term value for both our customers and our shareholders. With that, operator, we are now ready to take questions. Thank you.

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from Dylan Becker from William Blair. Your line is now open.

Hey, gentlemen. Appreciate the question. Maybe, Githesh, starting with you. You kind of called out some of the dynamics in the ecosystem today, particularly on the claims environment. But wondering how maybe you see that recovering as carriers look to drive kind of greater visibility into the claims process, how that can flow through to achieving kind of equilibrium on the premium side of the equation more efficiently, more effectively and maybe spark some of that kind of normalization from a volume trend perspective?

Sure. So first, just to give kind of a much broader perspective. Over the last 20 years or so, we have seen claim volume in over a 20-year time period, go up, go down. So -- and generally, it's been running in that range for a long period of time with small periods in between. And as a result, our solutions give you a tremendous amount of ability to focus not just on the number of claims, but each claim has many different aspects to it. So if you think about our core algorithm for growth, we are addressing more and more and more components of the claim. So the actual impact of this is much milder on our business. Part of the reason is we're mostly subscription versus transaction. But net-net of it is that we are seeing claims actually take place or accident frequency continues to take place, but other data that we're watching show that it is fundamentally an issue of claims not being filed versus claims not happening.

Okay. Great. Okay. So fair to say, in your ability to kind of drive precision in that process should help them kind of normalize over time as well, too. Okay. I think that's fair. Maybe for Brian, you called out -- we talked about the value of the platform, right, the tangible value of the network. In this period of uncertainty, how you're kind of thinking of that opportunity to sell ROI as an enabler of kind of sustained momentum? I think you called out the emerging solutions having stepped up as well to maybe kind of triangulate or reconcile the ROI of emerging and how that's kind of flowing through to the business model here? Thank you.

Yes. Happy to, Dylan. Yes, I mean the point of selling on ROI is a basis of how we operate. So, this isn't a new thing, this is a consistent approach. And so our solutions are all ROI-based. And so it certainly plays through in the newer solutions when we talk about Estimate-STP, when we talk about subrogation, they are driven off hard ROI metrics that we show the clients and then we price based off those ROI. So, it's a process and the methodology that we've had in place for a while. Certainly, the new solutions are rooted in that and we do expect that to continue to help drive momentum across the business, especially in the macroeconomic conditions, we're seeing really good demand for these ROI solutions.

Great. Thank you both. Appreciate it.

Yes, thank you.

Thank you. Our next question comes from Callie Valenti from Goldman Sachs. Your line is now open.

Hey, thanks for taking my question and I really appreciate all the detail on the call. Wanted to ask a follow-up on the claims volumes topic. Curious what you've seen in previous cycles of claims weakness? Like typically, how long do you see the weaker claims volumes last? And this particular cycle kind of the same or different from what you've seen in the past?

Yes, I would say the period can last anywhere from a year to two years. We've seen those cycles. What is interesting about this cycle is what the underlying cause is driving it. I'll give you a couple of data points. So, what we have seen is that, if you look back at 2020, 40% of claims filed were below $2,000. In 2025, claims below $2,000 are only 25%. Yes, claims costs have gone up. But what we are seeing is the propensity for consumers to hold back from filing claims because of the risk of either coverage being dropped or premiums going up. So, that is -- so as a result, consumer self-pay is increasing slightly, but the underlying that is really what we see as the underlying dynamic. And that's why we believe some of this should normalize over time.

Yes, that makes a lot of sense. And then did you see the progress with Emerging Solutions getting to that two points of growth. As you look at the full year, any change in your expectations for contribution? And out of the three emerging solutions you called out, did any in particular surprise you to the upside in the quarter? Thank you.

Yes. We talked about in the past few quarters, Emerging has been rounding to 1. And now we've seen the momentum in progress. It's now rounding up to 2. It is -- it's not a full point. It's important to note that it's incrementally -- we're making progress on it. And now, as I said, it's rounding to 2. It was broad-based. It came from Build Sheets, Diagnostics, Estimate-STP, Subrogation, all those contributed to the step-up. And we're seeing -- as we look forward, we do continue to see this strength play out for the balance of the year. So, we're feeling good on the progress and momentum that we're seeing across the emerging solution set.

Thank you. Appreciate the detail.

Yeah. Thank you, Callie.

Thank you. Our next question comes from Alexei Gogolev from JPMorgan. Your line is now open.

Hello, everyone. Brian, can I confirm what was organic growth in Q1? So was it 10.6 minus four percentage points from EvolutionIQ?

Yeah, that's right. I mean we highlighted that EvolutionIQ drove four points of growth in the quarter. So the balance is core CCC. So we're at the lower end of our long-term target. But yes, you're reading it right on the breakdown between EvolutionIQ and the core.

Great. Thank you. And Githesh, following up on the discussion about claim volumes, can you remind us where is currently the share of self claimed repair by consumers?

Yeah. I mean, look, we try to piece this data together. It's not a perfect science. But what we are seeing is that consumers self-pay, just as an anecdotal point has increased to about 25%. When we look at the repair side of our data set, consumer self-pay is about 25%. So when you dial the clock back about three years ago, consumer self-pay was probably closer to 11% or 12%. So it has increased. So we are seeing that increase. And then what we're seeing is with our repair facility consume customers, in particular, the use of ENGAGE and our website tools and all of those tools, they're starting to deploy those tools more and more to capture more of the business that is consumer self-pay. And then on the insurer side, obviously, we don't see the data because those claims aren't being filed. Does that help, Alexei?

It does. It does. Thank you very much.

Thank you. Our next question comes from Kirk Materne from Evercore ISI. Your line is now open.

This is [indiscernible] on for Kirk. And thanks for taking my question. While it's a small part of the business, can you talk about whether tariffs could potentially have any impact on the parts suppliers part of the business?

Sure. So first and foremost, what has happened as a result of tariffs is that across the board, whether it is insurers, repairs, parts providers and particularly our OEM customers who are increasingly using adopting more and more CCC solutions, we're being asked a lot of questions, and we've been able to look at the data set and try to predict and try to provide a lot of insights across our customer base in terms of what are the expectations and the flow-through impact of tariffs on OEM parts prices, aftermarket prices, recycled parts and the like, it's still very, very early days, but we've increased the monitoring and the tool set on all of this for our customers and are engaging more deeply. Now when it comes to the CCC business model itself, it has virtually minimal or no impact because, as you know, all our revenue is really -- the vast majority is subscription-based and there's about a 15%, 20% component that is frequency dependent.

Great. And then regarding Medhub, do you have any stats around what the learning curve is and the increase in efficiency that people see when they're using it?

Yes. I would say it is – so first and foremost, it has a tremendous ROI in terms of what it can deliver. And we are seeing combined ratio impact of using MedHub in the low single-digit points, which is pretty significant. And also there's an LAE impact or an efficiency impact for customers. And that efficiency impact can be significant as much as 20-plus percent impact. So there's a range of those efficiencies. But most importantly, MedHub is a synthesis tool, which takes very, very complex medical procedures and all of those things. And that's really in our early conversations with CCC Casualty customers, workers' compensation customers. There's a lot of excitement about wanting to work with us on deploying MedHub because of those two factors.

Great. Thanks for taking my questions.

Yes.

Thank you. Our next question comes from Saket Kalia from Barclays. Your line is now open.

Okay. Great. Hey, guys. Thanks for taking my questions here. And appreciate all the data.

Yes. Absolutely.

Yes for sure. Githesh, maybe for you, just to stay on the topic of claims. You've been clear in saying that this is – that this is cyclical and eventually will normalize. But just to make sure the question is asked, what data points do you maybe look at to get confidence that claims volume isn't being impacted by other things like ADAS, for example, or any other exogenous factors? Would just love your view there?

All right, Saket. Thanks.

Thank you.

Sure. The EvolutionIQ business, if you look at the vast majority of the revenue today in EvolutionIQ, it is really around disability. And they have seven of the large customers in EvolutionIQ. And short-term disability, long-term disability, is really no correlation to the auto frequency. The other growth area for EvolutionIQ is workers' compensation and in workers' compensation seven of our existing CCC customers also happen to be some of the largest workers' comp insurers in the country. And EvolutionIQ's workers' comp solution affects -- goes directly towards them. And again, that's not correlated to auto. On the Casualty front, what we are seeing with the acceleration of MedHub and the synthesis capability is that it gives us a lot of opportunity to really build out our casualty solution. As you know, we have stated publicly multiple times that we are seeing significant momentum in Casualty and the CCC Casualty's solution is connected directly to auto, and we are seeing significant growth in that business as we bring on more customers. The number of Casualty customers we have is a small fraction of what we have in auto physical damage. So we see that growth. And then to turbocharge that a little further, that's why we're very excited that the teams have been able to accelerate MedHub, which is a generative capability that can take deep, deep knowledge of medical procedures and the like and have an impact on Casualty. So that's why we're excited about that. Does that help you? Maybe Brian can add…

I'll take the second part of your question first. We have had conversations with customers, both within disability, workers' comp and CCC's core customer base. Across the board, there's tremendous excitement, because the EIQ team has really, really built a lot of depth and a lot of capability. So we're seeing that. We are targeting typically a 5:1 ROI, and there's tremendous excitement around it. But in terms of actually pricing and the revenue models, we have not fully locked down on that, and it won't really have much of an impact this year. Brian, do you want to take?

Yes. Thank you.

Thank you. [Operator Instructions] Our next question comes from Matt Bullock from Bank of America. Your line is now open.

Great. Thanks. Hi. I'm on for Mike Funk. Appreciate the question. So good to see the progress of emerging solutions despite some of the macro pressure. Can you help us think about how the uncertainty has been and could impact implementation cycles and adoption momentum of those emerging solutions if you view any of those would be more or less macro sensitive? Thanks.

Yes. We don't really see as we've said, the demand is continues to be very strong across all of our emerging solutions, right, whether it is Estimate STP, which is now increased in volume, 40-plus customers as diagnostics, parts. We're seeing -- and the demand continues to be very strong. And we don't think it really affects implementation cycles, even the OEM customer that I mentioned. It was a pretty fast implementation. We signed the contract at the end of March. They rolled out literally in April, so it's pretty fast. So we don't think it affects it. What Brian and I are saying is that out of the abundance of caution, given the broader macro environment, it behooves us to be somewhat prudent in how we forecast revenues and the like. And to be very clear, we're not seeing the impact. We just want to make sure we're cautious in terms of how this may or may not affect things further down the road.

Got it. Thank you very much.

Thank you. Our next question comes from Chris Moore from CJS Securities. Your line is now open.

Hi. This is Will on for Chris. CCC payments is an important long-term opportunity. Could you talk a bit more about the progress made over the past year as well as the critical milestones that we should be thinking about in 2025?

Sure. We have got a couple of smaller customers up and running live that happened in the last quarter and that has allowed us to actually execute different workflows in payments. And so we're quite excited that it went live. It's not a material impact in terms of revenue this year. But in exercising the various payment flows, it's been good, and we feel good about the momentum.

Thank you. And it's been four years since CCC went public, what is the biggest change from that market perspective? And how would you compare your competitive positioning now versus then?

I would say our competitive positioning continues to get better. And I would say there are really three underlying fundamental reasons for that. One, the innovation that we have invested in so heavily for the last four years is really giving us a technological advantage that our customers are seeing. Second, the network itself that we have built, across OEMs and parts providers and insurers and the like, that network continues to be very, very strong. And the sentiment of our customers, in terms of our -- with continuing to win new logos, with a 99% GDR, the customer retention has been pretty solid. And I would say, the most important thing we're seeing is the, ROI that our solutions are with emerging solutions on top of our core solutions, that ROI is being very well received and is a very important strategic component for our customers. So those are the factors that we see from our vantage point.

Thank you.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Githesh Ramamurthy, for closing remarks.

Well, I want to take this opportunity on behalf of all of us at CCC, for joining us today. And most important, I'd like to thank our customers, CCC team members and shareholders for a strong start to 2025. We are excited about helping our customers with the digital transformation journeys they're on, and remain confident in our ability to deliver on our long-term strategic and financial objectives. Thank you so much for your continued interest and trust in CCC. And we look forward to updating you on our next call.