CCC Intelligent Solutions Holdings Inc

ORGANIZATION AND nature of operations

CCC Intelligent Solutions Holdings Inc. (the "Company"), a Delaware corporation, is a leading software as a service ("SaaS") platform for the multi-trillion-dollar property and casualty ("P&C") insurance economy, powering operations for insurers, repairers, automakers, parts suppliers, lenders and more. CCC's cloud technology connects businesses digitizing mission-critical workflows, commerce and customer experiences.

The Company's cloud-based SaaS platform connects trading partners, facilitates commerce and supports mission-critical artificial intelligence ("AI") enabled digital workflows.

The Company is headquartered in Chicago, Illinois. The Company’s primary operations are in the United States ("US") and it also has operations in China.

The Company was originally incorporated as a Cayman Islands exempted company on July 3, 2020 as a special purpose acquisition company under the name Dragoneer Growth Opportunities Corp ("Dragoneer"). On February 2, 2021, Cypress Holdings Inc. ("CCCIS"), a Delaware corporation, entered into a Business Combination Agreement (the "Business Combination Agreement") with Dragoneer. In connection with the closing of the business combination ("Business Combination"), Dragoneer changed its jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a Delaware corporation on July 30, 2021, upon which Dragoneer changed its name to CCC Intelligent Solutions Holdings Inc.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presenta tion—The condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023, the condensed consolidated statements of mezzanine equity and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 have been prepared by the Company and have not been audited. In the opinion of management, all adjustments (which include only normal recurring adjustments except where disclosed) necessary for the fair presentation of the financial position, results of operations and cash flows have been made. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or any future period.

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission ("SEC"). The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, the condensed consolidated financial statements may not include all the information and footnotes necessary for a complete presentation of the Company's financial position, results of operations or cash flows. These condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The Company's significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the significant accounting policies since December 31, 2023.

Basis of Accounting—The accompanying condensed consolidated financial statements are prepared in accordance with GAAP and include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements include 100% of the accounts of wholly-owned and majority-owned subsidiaries and the ownership interest of the minority investor is recorded as a non-controlling interest in a subsidiary.

Use of Estimates—Thepreparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts, and the disclosures of contingent amounts, in the Company’s condensed consolidated financial statements and the accompanying notes. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from management’s estimates if past experience or other assumptions are not substantially accurate. Significant estimates in these condensed consolidated financial statements include the estimation of contract transaction prices, the determination of the amortization period for contract assets, the valuation of goodwill and intangible assets, the valuation of the warrant liabilities, and the estimates and assumptions associated with stock incentive plans.

Reclassifications—Certain reclassifications of prior period amounts have been made to conform to the current period presentation. For the three and nine months ended September 30, 2024, changes in the fair value of the Company's interest rate cap agreements are recognized within other (expense) income—net in the condensed consolidated statements of operations and comprehensive income (loss). Corresponding amounts recognized during the three and nine months ended September 30, 2023, were previously classified as a change in fair value of derivative instruments and have been reclassified to conform to the current period presentation. The amounts reclassified had no impact on net income (loss).

Recently Issued Accounting Pronouncements—In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The amendments in this update are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the disclosure requirements related to this update.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. The amendments in this update are effective for fiscal years beginning after December 31, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is evaluating the disclosure requirements related to this update.

REvenue

Disaggregation of Revenue—The Company provides disaggregation of revenue based on type of service as it believes these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The following table summarizes revenue by type of service for thethree and nine months ended September 30, 2024 and 2023 (in thousands):

Transaction Price Allocated to the Remaining Performance Obligations—Remaining performance obligations represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of September 30, 2024, approximately $1,512 million of revenue is expected to be recognized from remaining performance obligations in the amount of approximately $636 million during the following twelve months, and approximately $876 million thereafter. The estimated revenues do not include unexercised contract renewals. The remaining performance obligations exclude future transaction revenue where revenue is recognized as the services are rendered and in the amount to which the Company has the right to invoice.

Deferred Revenue—Revenue recognized for the three months ended September 30, 2024 from amounts in deferred revenue as of June 30, 2024 was $42.8 million. Revenue recognized for thethree months ended September 30, 2023 from amounts in deferred revenue as of June 30, 2023 was $37.1 million. Revenue recognized for the nine months ended September 30, 2024 from amounts in deferred revenue as of December 31, 2023 was $41.1 million. Revenue recognized for thenine months ended September 30, 2023 from amounts in deferred revenue as of December 31, 2022 was $34.7 million.

Contract Assets and Liabilities—The opening and closing balances of the Company’s receivables, contract assets and contract liabilities from contracts with customers are as follows (in thousands):

A summary of the activity impacting deferred revenue balances during thethree and nine months ended September 30, 2024 and 2023 is presented below (in thousands):

1 Amounts include total revenue deferred and recognized during each respective period.

A summary of the activity impacting the deferred contract costs during thethree and nine months ended September 30, 2024 and 2023 is presented below (in thousands):

FAIR VALUE measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Private Warrants—Upon consummation of the Business Combination, the Company assumed warrants sold in a private placement ("Private Warrants") issued by Dragoneer. In May 2024, the Private Warrants were redeemed and as of September 30, 2024, no Private Warrants were outstanding (see Note 17).

As of December 31, 2023, the Company's Private Warrants were recognized as liabilities and measured at fair value on a recurring basis.

The Private Warrants were valued using Level 1 and Level 2 inputs within the Black-Scholes option pricing model. The assumptions utilized under the Black-Scholes option pricing model require judgments and estimates. Changes in these inputs and assumptions could affect the measurement of the estimated fair value of the Private Warrants. Accordingly, the Private Warrants were classified within Level 2 of the fair value hierarchy.

The valuation of the Private Warrants as of December 31, 2023 was determined using the Black-Scholes option pricing model using the following assumptions:

The estimated fair value of each Private Warrant using the Company's stock price on the valuation date and above assumptions was $2.89 as of December 31, 2023.

Contingent Consideration Liability—The contingent consideration liability relates to the Company's acquisition of Safekeep, Inc. in February 2022. The contingent consideration liability is adjusted each reporting period for changes in fair value, which can result from changes in anticipated payments and changes in assumed discount rates. These inputs are unobservable in the market and therefore categorized as Level 3 inputs.

The estimated fair value of the contingent consideration was determined using probability-weighted discounted cash flows and a Monte Carlo simulation model. The discount rate, based on the Company's estimated cost of debt, was 10%.

As of December 31, 2023, the contingent consideration liability had a fair value of $0.1 million. As of September 30, 2024, there were no significant changes to the inputs used within the Monte Carlo simulation model and the estimated fair value of the contingent consideration liability was $0.1 million. The Company didnot recognize any change in the estimated fair value of the contingent consideration liability during thethree and nine months ended September 30, 2024 or the three and nine months ended September 30, 2023. The contingent consideration liability is recognized within accrued expenses and other liabilities within the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

Interest Rate Cap—In August 2022, the Company entered into two interest rate cap agreements to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt (see Note 13). The fair value of the interest rate cap agreements was estimated using inputs that were observable or that could be corroborated by observable market data and therefore was classified within Level 2 of the fair value hierarchy as of September 30, 2024 and December 31, 2023.

The Company did not designate its interest rate cap agreements as hedging instruments and records the changes in fair value within other (expense) income—net on the condensed consolidated statements of operations and comprehensive income (loss). As of September 30, 2024 and December 31, 2023, the interest rate cap agreements had a fair value of $1.4 million and $6.2 million, respectively. The fair value of the interest rate cap agreements is classified within other current assets and other assets in the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

The following table presents the fair value of the assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 (in thousands):

The following table presents the fair value of the assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 (in thousands):

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis—The Company has assets that under certain conditions are subject to measurement at fair value on a nonrecurring basis. These assets include those associated with acquired businesses, including goodwill and other intangible assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. The Company didnot recognize any impairment charges related to these assets during thethree and nine months ended September 30, 2024 and the three months ended September 30, 2023. During the nine months ended September 30, 2023, the Company recognized impairment charges of goodwill and definite-lived intangible assets (see Note 10).

Fair Value of Other Financial Instruments—The following table presents the carrying amounts, net of debt discount, and the estimated fair values of the Company’s financial instruments that are not recorded at fair value on the condensed consolidated balance sheets (in thousands):

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar instruments and fluctuates with changes in applicable interest rates among other factors. The fair value of long-term debt is classified as a Level 2 measurement in the fair value hierarchy and is established based on observable inputs in less active markets.

INCOME TAXES

The Company recognized an income tax provision of $8.9 million and $1.8 million for thethree months ended September 30, 2024 and 2023, respectively. The income tax provision for the three months ended September 30, 2024 was primarily due to the Company's pre-tax book income. The income tax provision for the three months ended September 30, 2023 was primarily due to the tax treatment of the loss on the change in the fair value of warrant liabilities.

The Company recognized an income tax provision of $9.0 million and an income tax benefit of $1.2 million for thenine months ended September 30, 2024 and 2023, respectively. The income tax provision for the nine months ended September 30, 2024 was primarily due to the Company's pre-tax book income. The income tax benefit for the nine months ended September 30, 2023 was primarily due to the tax benefit related to stock-based compensation expense, the tax benefit recognized related to the impairment of certain intangible assets and the tax benefit related to a return to provision adjustment related to estimated research and development credits.

The Company made income tax payments of $11.6 million and $7.4 million during thethree months ended September 30, 2024 and 2023, respectively. The Company received negligible refunds from various states during the three months ended September 30, 2024 and 2023.

The Company made income tax payments of $42.1 million and $27.4 million during thenine months ended September 30, 2024 and 2023, respectively. The Company received negligible refunds from various states during the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, unrecognized tax benefits were materially consistent with the amount as of December 31, 2023. The Company believes its liability for unrecognized tax benefits, excluding interest and penalties, will not significantly change over the following twelve months.

accounts receivable

Accounts receivable—Net as of September 30, 2024 and December 31, 2023, consists of the following (in thousands):

As of September 30, 2024, two customers each accounted for 11% of accounts receivable. As of December 31, 2023, no customer accounted for more than 10% of accounts receivable.

Changes to the allowance for credit losses and sales reserves during thethree and nine months ended September 30, 2024 and 2023 consist of the following (in thousands):

OTHER CURRENT ASSETS

Other current assets as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):

SOFTWARE, EQUIPMENT, AND PROPERTY

Software, equipment, and property as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):

Depreciation and amortization expense related to software, equipment and property was$10.4 million and $10.1 million for thethree months ended September 30, 2024 and 2023, respectively.

Depreciation and amortization expense related to software, equipment and property was $29.5 million and $28.0 million for thenine months ended September 30, 2024 and 2023, respectively.

LEASES

The Company leases real estate in the form of office space and data center facilities. Generally, at the inception of the contract, the term for real estate leases ranges from 1 to 17 years and the term for equipment leases is 1 to 3 years. Some real estate leases include options to renew that can extend the original term by 3 to 5 years.

The components of lease expense for thethree and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

During the three months ended September 30, 2024 and 2023, the Company made cash payments for operating leases of $2.4 million and $1.8 million, respectively. During thenine months ended September 30, 2024 and 2023, the Company made cash payments for operating leases of $6.2 million and $3.8 million, respectively.

During the nine months ended September 30, 2024, the Company obtained operating lease assets in exchange for lease liabilities of $0.9 million. During thenine months ended September 30, 2023, the Company didnot obtain any operating lease assets in exchange for lease liabilities.

GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets are primarily the result of business acquisitions.

The Company performs its annual impairment assessment of goodwill and indefinite life intangible assets as of November 30 of each year.

No impairments to goodwill or indefinite life intangible assets were recorded during thethree and nine months ended September 30, 2024.

In May 2023, the Company's China reporting unit experienced adverse impacts as a result of changes in market conditions and increases in interest rates which contributed to reduced forecasted revenues and reduced projected future cash flows. As a result of these adverse impacts, the Company performed an interim quantitative assessment of goodwill impairment by comparing the fair value of its China reporting unit to its carrying value, including goodwill. When performing the assessment, the Company determined the fair value of its China reporting unit based on forecasted future cash flows. Based on the Company's forecast of the future cash flows of its China reporting unit, it was determined the carrying value of goodwill for its China reporting unit was impaired and the Company recorded a goodwill impairment charge of $77.4 million.

When performing the quantitative impairment assessment, the Company used a quantitative approach to measure the fair value of its China reporting unit using a discounted cash flow approach, which is a Level 3 measurement. The discounted cash flow analysis requires significant judgments, including estimates of future cash flows, which are dependent on internal forecasts and determination of the Company’s weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used for the China reporting unit in the Company’s analysis was 12.5%.

As of November 30, 2023, the Company performed a qualitative assessment for its remaining reporting unit with goodwill and its trademark indefinite life intangible assets. The Company determined there were no indicators of impairment and that it was more likely than not that the fair value of the reporting unit and trademarks were greater than their carrying values and therefore performing the next step of the impairment test was unnecessary.

The following table presents the gross amount, accumulated impairment loss and carrying amount of goodwill as of September 30, 2024 and December 31, 2023 (in thousands):

The accumulated impairment loss as of December 31, 2023 was due to the impairment charge discussed above of $77.4 million and an impairment charge of $25.8 million recognized during the year ended December 31, 2019.

There wereno changes in the carrying amount of goodwill during thethree and nine months ended September 30, 2024.

Intangible Assets—No intangible asset impairments were recorded during thethree and nine months ended September 30, 2024.

During the nine months ended September 30, 2023, the Company recorded an impairment charge to its China reporting unit's customer relationships and acquired technologies intangible assets. The Company's forecast of the revenue and expense cash flow of the China reporting unit indicated the carrying amounts of the intangible assets werenot recoverable and therefore the Company recorded an impairment charge of $5.3 million.

The intangible assets balance as of September 30, 2024 is reflected below (in thousands):

The intangible assets balance as of December 31, 2023 is reflected below (in thousands):

Amortization expense for intangible assets was $18.1 million and $24.5 millionfor the three months ended September 30, 2024 and 2023, respectively. Amortization expense for intangible assets was $62.7 million and $73.9 millionfor the nine months ended September 30, 2024 and 2023, respectively.

Future amortization expense for the remainder of the year ended December 31, 2024 and the following four years ended December 31 and thereafter for intangible assets as of September 30, 2024 is as follows (in thousands):

ACCRUED EXPENSES

Accrued expenses as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):

OTHER LIABILITIES

Other liabilities as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):

LONG-TERM 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 proceeds of the 2021 Credit Agreement and cash on hand were used to repay all outstanding borrowings under the Company's previous credit agreement.

The 2021 Credit Agreement consists of an $800.0 million term loan ("Term B 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 B Loan, the "2021 Credit Facilities"). The 2021 Revolving Credit Facility has a sublimit of $75.0 million for letters of credit. The Company received proceeds of $798.0 million, net of debt discount of $2.0 million, related to the Term B Loan. As of September 30, 2024 and December 31, 2023, the unamortized debt discount was $1.2 million and $1.4 million, respectively.

The Company incurred $9.8 million in financing costs related to the Term B Loan. These costs were recorded to a contra debt account and are being amortized to interest expense over the term of the Term B Loan using the effective interest method. As of September 30, 2024 and December 31, 2023, the unamortized financing costs were $6.1 million and $7.1 million, respectively.

The Term B Loan requires quarterly principal payments of $2.0 million until June 30, 2028, with the remaining outstanding principal amount required to be paid on the maturity date, September 21, 2028. If the Company's leverage ratio, as defined in the 2021 Credit Agreement, is greater than 3.5, the Term B Loan requires a principal prepayment, 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, 2023, 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, wasnot required to make a principal prepayment.

As of September 30, 2024 and December 31, 2023, the amount outstanding on the Term B Loan is $778.0 million and $784.0 million, respectively, of which $8.0 million is 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.

In May 2023, the Company entered into Amendment No. 1 to the 2021 Credit Agreement (the "First Amendment") to establish the Secured Overnight Financing Rate ("SOFR") as the benchmark rate for determining the applicable interest rate, replacing the London Interbank Offer Rate ("LIBOR"). No other terms, including the amount of borrowings, required payments or maturity date, were changed as a result of the First Amendment. The Company did not incur significant costs associated with the Amendment.

Subsequent to the execution of the First Amendment, 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 (other than with respect to Euros, the Euro Interbank Offer Rate ("EURIBOR") and with respect to British Pounds Sterling, Sterling Overnight Indexed Average ("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).

Prior to the execution of the First Amendment, the interest rate per annum applicable to the loans was based on a fluctuating rate of interest equal to the sum of an applicable rate and, at the Company’s election from time to time, either:

(1)

a base rate determined by reference to the highest of (a) the rate last quoted by the Wall Street Journal as the "prime rate," (b) the federal funds effective rate plus 0.50%, (c) one-month LIBOR plus 1.00% and (d) with respect to the Term B Loan,1.50% and with respect to the 2021 Revolving Credit Facility,1.00%, or

(2)

a Eurocurrency rate determined by reference to LIBOR (other than with respect to Euros, EURIBOR and with respect to British Pounds Sterling, SONIA) with a term, as selected by the Company, of one, three or six months (subject to (x) in the case of term loans, a 0.50% per annum floor and (y) in the case of revolving loans, a 0.00% per annum floor).

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, subject to a springing maturity date of June 22, 2028 if greater than $234.0 million of the initial Term B Loan remains outstanding as of such date.

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, 2024 and December 31, 2023, the deferred financing fees asset balance was $1.8 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, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 7.7%, respectively.

During the nine months ended September 30, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 7.3%, respectively.

The Company has an outstanding standby letter of credit for $0.7 million which reduces the amount available to be borrowed under the 2021 Revolving Credit Facility. As of September 30, 2024 and December 31, 2023, $249.3 million 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, 2024 or December 31, 2023.

Long-term debt as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):

Interest Rate Caps—In August 2022, the Company entered into two interest rate cap agreements to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt.

In May 2023, the Company transitioned the referenced interest rate within the two interest rate cap agreements from LIBOR to SOFR by terminating the original agreements and simultaneously entering into new agreements. The terms of the new agreements were unchanged except for the referenced interest rate.

The interest rate cap agreements have an aggregate notional amount of $600.0 million and a one-month SOFR cap rate of 4.00% through their expiration in July 2025.

Cash received related to the interest rate cap agreements was $2.1 million and $1.9 million for thethree months ended September 30, 2024 and 2023, respectively.

Cash received related to the interest rate cap agreements was $6.1 million and $4.4 million for thenine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024 and December 31, 2023, the aggregate fair value of the interest rate cap agreements was $1.4 million and $6.2 million, respectively (see Note 4).

REDEEMABLE NON-CONTROLLING INTEREST

On March 12, 2020 (the "Close Date"), the Company closed a stock purchase agreement (the "Stock Purchase Agreement") with a third-party investor (the "Investor") for purchase by the Investor of Series A Preferred Stock in CCCIS Cayman Holdings Limited ("CCC Cayman"), the parent of the Company’s China operations. On the Close Date, CCC Cayman, a subsidiary of the Company, issued 1,818 shares of Series A Preferred Stock (the "Preferred Shares") at $7,854 per share to the Investor for net proceeds of $14.2 million. As of September 30, 2024 and December 31, 2023, on an as-converted basis, the Preferred Shares represent an aggregate 10.0% ownership interest of the issued and outstanding capital stock of CCC Cayman, or 8.6% on a fully-diluted basis.

The Preferred Shares are redeemable upon an actual or deemed redemption event as defined in the Stock Purchase Agreement or at the option of the Investor beginning on the five-year anniversary of the Close Date, if an actual or deemed redemption event has not yet occurred. The redemption price, as defined by the Stock Purchase Agreement, is equal to the original issue price of the Preferred Shares, plus 10.0% compound interest per annum on the Preferred Share issue price, plus any declared but unpaid dividends on the Preferred Shares.

The Preferred Shares do not participate in net income or losses.

As of September 30, 2024 and December 31, 2023, the Investor’s ownership in CCC Cayman is classified in mezzanine equity as a redeemable non-controlling interest, because it is redeemable on an event that is not solely in the control of the Company.

In May 2023, the Company determined it was probable the non-controlling interest would become redeemable and began to accrete the non-controlling interest to its redemption value. Changes in the carrying value of the non-controlling interest are recorded as adjustments to additional paid-in capital.

The activity impacting the redeemable non-controllable interest during thethree and nine months ended September 30, 2024 and 2023 is presented below (in thousands):

Capital stock

Preferred Stock—The Company is authorized to issue up to 100,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2024, there wereno shares of preferred stock issued or outstanding.

Common Stock—The Company is authorized to issue up to 5,000,000,000 shares of common stock with a par value of $0.0001 per share. Each holder of common stock is entitled toone vote for each share of common stock held of record by such holder on all matters voted upon by the stockholders, subject to the restrictions set out in the Company's certificate of incorporation. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors. Upon a liquidation event, subject to the rights of the holders of any preferred stock issued and outstanding at such time, any distribution shall be made on a pro rata basis to the common stockholders.

There were 625,325,706 and 603,128,781 shares of common stock issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.

Secondary Offerings—During the nine months ended September 30, 2024, certain existing stockholders completed secondary offerings where the selling stockholders sold an aggregate of 171.5 million shares of the Company's common stock. The Company didnot receive proceeds from the sale of the shares by the selling stockholders.

In connection with secondary offerings, the Company incurred costs of $0.1 and $2.0 million during thethree and nine months ended September 30, 2024, respectively, included within general and administrative expenses on the condensed consolidated statement of operations and comprehensive income (loss).

STOCK INCENTIVE PLANS

In July 2021, the 2021 Equity Incentive Plan (the "2021 Plan") was adopted and approved by the Company's board of directors and stockholders.

Restricted Stock Units—The table below summarizes the restricted stock unit ("RSU") activity for thenine months ended September 30, 2024:

During the nine months ended September 30, 2024, the Company granted 10,371,334 RSUs, of which 8,099,251 have time-based vesting requirements, and 2,272,083 have performance-based vesting requirements.

During the nine months ended September 30, 2024,14,007,032 RSUs vested, of which 4,972,134 were withheld for employee tax obligations.

During the year ended December 31, 2023, the Company's board of directors approved modifications to the performance-based RSUs subject to a market condition. The modifications included:(i) the extension of the performance period by one year, (ii) a change to the performance criteria, (iii) a change to the number of units to be issued depending on performance and (iv) for certain grants, imposing a maximum number of units to be issued depending on performance equal to 100% of the target.

The modification to the performance-based RSUs subject to a market condition resulted in incremental stock-based compensation expense of $67.0 million, which is being recognized ratably over the modified performance periods.

Stock Options—The table below summarizes the stock option activity for thenine months ended September 30, 2024:

The fair value of the options which vested during the nine months ended September 30, 2024 was $2.1 million.

Cayman Equity Incentive Plan—In December 2022, the Company adopted the CCCIS Cayman Holdings Employees Equity Incentive Plans ("Cayman Incentive Plans"), which provide for the issuance of stock option awards in CCC Cayman ("Cayman Awards") to eligible employees of the Company's China subsidiaries.

Awards under the Cayman Incentive Plans are settled in cash and thus accounted for as liability awards. Awards granted under the Cayman Incentive Plans have time-based vesting and expire on the tenth anniversary of the grant date.

During the nine months ended September 30, 2024, the Company granted 761,743 stock options under the Cayman Incentive Plans. The exercise price of the options granted is equal to the fair value of the underlying shares at the grant date. As of September 30, 2024 and December 31, 2023,2,373,542 and 1,735,900, respectively, of stock options under the Cayman Incentive Plans are outstanding.

Employee Stock Purchase Plan—In July 2021, the Company adopted the CCC 2021 Employee Stock Purchase Plan ("ESPP").

During the nine months ended September 30, 2024, 608,891 shares were sold under the ESPP.

The fair value of the ESPP purchase rights sold duringthe nine months ended September 30, 2024 was estimated using the Black-Scholes option pricing model with the following assumptions:

Stock-Based Compensation—Stock-based compensation expense has been recorded in the accompanying condensed consolidated statements of operations and comprehensive income (loss) as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

As of September 30, 2024, there was $185.3 million of unrecognized stock compensation expense related to unvested time-based awards which is expected to be recognized over a weighted-average period of 2.6 years. As of September 30, 2024, there was $53.5 million of unrecognized stock-based compensation expense related to unvested performance-based awards which is expected to be recognized over a weighted-average period of 1.2 years.

WARRANTS

Upon consummation of the Business Combination, the Company assumed warrants sold in a private placement ("Private Warrants") issued by Dragoneer.

On May 9, 2024 ("Redemption Date"), the Company redeemed all of the outstanding Private Warrants for an aggregate of 3,809,200 shares of the Company's common stock. The holder of the Private Warrants received 0.214 shares of common stock for each Private Warrant exchanged. No cash was paid by the Company in exchange for the redeemed Private Warrants. The Private Warrants were valued on the Redemption Date using the Black-Scholes option pricing model with the following assumptions:

The estimated fair value of each Private Warrant using the Company's stock price on the Redemption Date and above assumptions was $2.09.

Following the redemption, the Company hadno Private Warrants outstanding. As of December 31, 2023, the Company had 17,800,000 Private Warrants outstanding.

Due to the redemption in May 2024, the Company didnot recognize any income or expense as a change in fair value of warrant liabilities during thethree months ended September 30, 2024. The Company recognized expense of $26.2 million as a change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended September 30, 2023.

The Company recognized income of $14.4 million and expense of $45.4 million as a change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2024 and 2023, respectively.

As of December 31, 2023, the Company’s warrant liability was $51.5 million.

COMMITMENTS

Purchase Obligations—The Company has long-term agreements with suppliers and other parties related to licensing data used in its services, outsourced data center, disaster recovery and SaaS that expire at various dates through 2031. During the nine months ended September 30, 2024, the Company entered into purchase agreements with suppliers which include total minimum purchase commitments of $29.6 million, $31.3 million and $50.1 million during the years ending December 31, 2025, 2026 and 2027, respectively. As of September 30, 2024, there were no other material changes from the amounts disclosed as of December 31, 2023.

Guarantees—The Company’s services and solutions are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and substantially in accordance with the Company’s services and solutions documentation under normal use and circumstances. The Company’s services and solutions are generally warranted to be performed in a professional manner and to materially conform to the specifications set forth in the related customer contract. The Company’s arrangements also include certain provisions for indemnifying customers against liabilities, subject to customary limitations, if its services and solutions infringe a third party’s intellectual property rights.

To date, the Company has not incurred any material costs as a result of such indemnifications or commitments and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

Employment Agreements—The Company is a party to employment agreements with key employees that provide for compensation and certain other benefits. These agreements also provide for severance and bonus payments under certain circumstances.

LEGAL PROCEEDINGS AND CONTINGENCIES

In the ordinary course of business, the Company is from time to time, involved in various pending or threatened legal actions. The litigation process is inherently uncertain, and it is possible that the resolution of such matters might have a material adverse effect upon the Company’s consolidated financial condition and/or results of operations. The Company’s management believes, based on current information, matters currently pending or threatened are not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

ReLATED PARTIES

The Company has engaged in transactions within the ordinary course of business with entities affiliated with its principal equity owners and directors.

The following table summarizes revenues recognized and expenses incurred with entities affiliated with one of its principal equity owners and directors for thethree and nine months ended September 30, 2024 and 2023 (in thousands):

• Not significant.

^ As of September 30, 2024, the entity which provides human resources support services is no longer a related party.

The Company had a related party payable due to its employee health insurance benefits vendor for $0.2 million and $0.5 million as of September 30, 2024 and December 31, 2023, respectively.

OTHER (EXPENSE) INCOME—NET

Other (expense) income—Net consists of the following (in thousands):

NET INCOME (LOSS) PER SHARE

The Company calculates basic earnings per share by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. The diluted earnings per share is computed by assuming the exercise, settlement and vesting of all potential dilutive common stock equivalents outstanding for the period using the treasury stock method. The Company excludes common stock equivalent shares from the calculation if their effect is anti-dilutive. In a period where the Company is in a net loss position, the diluted loss per share is calculated using the basic share count.

The following table sets forth a reconciliation of the numerator and denominator used to compute basic and diluted earnings per share of common stock (in thousands, except for share and per share data).

Approximately 344,640 and 32,593,648 common stock equivalent shares were excluded from the computation of diluted per share amounts for thethree months ended September 30, 2024 and 2023, respectively, because their effect was anti-dilutive.

Approximately 57,487 and 31,454,944 common stock equivalent shares were excluded from the computation of diluted per share amounts for thenine months ended September 30, 2024 and 2023, respectively, because their effect was anti-dilutive.

As part of the Business Combination,8,625,000 shares issued and held by Dragoneer (the "Sponsor Vesting Shares") became non-transferable and subject to forfeiture on the tenth anniversary of the closing of the Business Combination if neither of the defined triggering events has occurred. The Sponsor Vesting Shares are issued and outstanding as of September 30, 2024 and December 31, 2023 and excluded from the weighted average number of shares of common stock outstanding until the vesting requirement is met and the restriction is removed.

SEGMENT INFORMATION and information about geographic areas

The Company operates inone operating segment. The chief operating decision maker for the Company is the chief executive officer. The chief executive officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by type of service and geographic region, for purposes of allocating resources and evaluating financial performance.

Revenues by geographic area, presented based upon the location of the customer are as follows (in thousands):

Software, equipment and property—Net by geographic area are as follows (in thousands):