CCC 10-K & 10-Q changes, risk factors and insider trading

A substantial portion of our revenue is derived from a relatively small number of customers in the P&C insurance and automotive collision industries, and the loss of any of these customers, or a significant revenue reduction from any of these customers, could materially impact our business, results of operations and financial condition.

Our revenue is primarily dependent on customers in the P&C insurance and automotive collision industries, and historically a relatively small number of customers have accounted for a significant portion of our revenue. There were no customers which individually accounted for more than 10% of our total revenue during the year ended December 31, 2024.2025. We expect that we will continue to depend upon a relatively small number of customers for a significant portion of our revenue for the foreseeable future. As a result, if we fail to successfully renew our contracts with one or more of these customers, or if any of these customers reduce or cancel services or defer purchases, or otherwise terminate their relationship with us, our business, results of operations and financial condition would be adversely impacted. Some of our SaaS arrangements with our customers can be canceled or not renewed by the customer after the expiration of the SaaS term, as applicable, on relatively short notice. Additionally, we may be involved in disputes with our customers in the future and such disputes may impact our relationship with these customers. The loss of business from any of our significant customers, including from cancellations or due to disputes, could materially impact our business, results of operations and financial condition.

We believe that the brand identity we have developed and acquired has significantly contributed to the success of our business. We also believe that developing, maintaining, and enhancing awareness and integrity of our brand and reputation are critical to achieving widespread acceptance of our solutions and expanding adoption of our solutions to new customers in both existing and new markets. Maintaining and enhancing our brand requires us to make substantial investments and these investments may not be successful or cost-efficient. We believe that the importance of our brand and reputation will increase as competition in our market further intensifies. Successful promotion of our brand depends on the effectiveness of our marketing efforts and our ability to provide a reliable, useful and valuable collection of solutions at competitive prices. These factors are essential to our ability to differentiate our offerings from competing solutions. In addition, our brand and reputation could be impacted if our end users or insured parties have negative experiences in the claimclaims process,or repair processes, which ultimately largely depends on the quality of service from our customers, but also may depend on the insured’s perceivedperceptions and expectations including regarding the value of itstheir vehicle. See “—Litigation Risk Factors—We are currently, and have been in the past, a party to litigation, which could result in damage to our reputation and harm our future results of operations.” For example, putative class action lawsuits have alleged that the use of the Company’s total loss valuation solution has led to undervaluation of insureds’ loss vehicles.

Maintaining and enhancing our brand will depend largely on our ability to be a technology innovator, to continue to provide high quality solutions and to protect and defend our brand names and trademarks, which we may not do successfully. We have not engaged in extensive direct brand promotion activities, and we may not successfully implement brand enhancement efforts in the future. Our solutions and services generallyused by consumers are brandedgenerally customer-branded and are likely associated with the overall experiences of a participant in the insurance economy, which is largely outside of our control. Any brand promotion activities we undertake may not yield increased revenue, and even if they do, the increased revenue may not offset the expenses we incur in building and maintaining our brand and reputation. If we fail to promote and maintain our brand successfully or to maintain loyalty among our customers, we may fail to attract new customers and partners or retain our existing customers and partners and our business and financial condition may be adversely affected. Any negative publicity relating to our customers, employees, partners, or others associated with these parties, may also tarnish our own reputation simply by association and may reduce the value of our brand. Damage to our brand and reputation may result in reduced demand for our solutions and increased risk of losing market share to competitors. Any efforts to restore the value of our brand and rebuild our reputation may be costly and may not be successful.

Our revenue growth rate depends on existing customers renewing and upgrading their SaaS software subscriptions for our solutions. A decline in our customer renewals and expansions could adversely impact our future results of operations.

Our future success depends in part on our ability to sell additional SaaS and AI solutions to existing customers. If our efforts to sell our additional solutions to our customers are not successful, our revenue growth and our business, results of operations, and financial condition would be adversely impacted. Further, our customers have no obligation to renew their contracts for our solutions after the expiration of their contract periods and our customers may choose not to renew contracts for a similar mix of solutions. Our customers’ renewal rates may fluctuate or decline as a result of a number of factors, including customer dissatisfaction, customers’ spending levels, increased competition, changes in tax or data privacy laws or rules, prices of our services, the prices of services offered by our competitors, spending levels due to the macroeconomic environment or other factors, deteriorating general economic conditions, or legislative and regulatory changes. If our customers do not renew their contracts or reduce the solutions purchased under their contracts, our revenue could decline and our business may be adversely impacted.

Our growth strategy depends on continued investment in and delivery of innovative SaaS and AI solutions. If we are unsuccessful in delivering innovative SaaS and AI solutions, it could adversely impact our results of operations and financial condition.

To address demand trends across the insurance economy, we have focused on and plan to continue focusing on the growth and expansion of our SaaS and AI business. This growth strategy has required and will continue to require a considerable investment of technical, financial and sales resources. These investments may not result in an increase in SaaS software revenue and we may not be able to scale such investments efficiently, or at all, to meet customer demand and expectations. Our focus on our SaaS and AI business may increase our costs in any given period and may be difficult to predict over time.

Our SaaSarrangements arrangementswith customers also contain service level agreement clauses which may include penalties for matters such as failing to meet stipulated service levels. The consequences in such circumstances could include monetary credits for current or future service engagements, reduced fees for additional solution sales, cancellations of planned purchases, a customer’s refusal to pay their contractually-obligated SaaS or professional service fees, and our reputation being tarnished. Should these penalties be triggered, our results of operations may be adversely affected. Furthermore, any factor adversely affecting sales of our SaaS or AI solutions, including application release cycles, delays or failures in new functionality, market acceptance, product competition, performance and reliability, reputation, price competition and economic and market conditions, could have a material adverse effect on our business, financial condition and results of operations. Additionally, the entry into new markets or the introduction of new features, functionality or applications beyond our current markets and functionality, including new AI tools, may not be successful. If we invest in the development of new solutions, we may not recover the “up-front” costs of developing and marketing those solutions, or recover the opportunity cost of diverting management, technical and financial resources away from other efforts. If we are unable to successfully grow our SaaS and AI business and navigate our growth strategy in light of the foregoing uncertainties, our reputation could suffer and our results of operations may be impacted, which may cause our stock price to decline.

Factors outside of our control including but not limited to public health outbreaks, natural catastrophes, war, and terrorism, may adversely impact us, our customers, or the insurance economy, preventing us from expanding or maintaining our existing customer base and increasing our revenue.economy.

OurFurthermore, our largest customers are carriers who have experienced, and will likely experience in the future, losses from catastrophes, natural disasters or terrorism that may adversely impact their businesses. Catastrophes can be caused by various events, including, without limitation, hurricanes, tsunamis, floods, windstorms, earthquakes, hail, tornadoes, explosions, severe weather, epidemics, pandemics and fires, including as a result of an increase in erratic weather patterns globally which may intensify the impact of certain types of catastrophes. Moreover, acts of terrorism or war could cause disruptions to our business or our customers’ businesses or the economy as a whole.

The risks associated with catastrophes, natural disasters, war and terrorism are inherently unpredictable, and it is difficult to forecast the timing of such events or estimate the amount of losses they will generate. In recent years, for example, parts of the U.S. suffered extensive damage due to multiple hurricanes, fires, floods and other extreme weather events. The combined effect of those losses on carriers was significant. Such losses and losses due to future events may adversely impact our current or potential customers, which may prevent us from maintaining or expanding our customer base and increasing our revenue as such events may cause customers to postpone purchases of new offerings or to discontinue existing projects. Any of these events could materially impact our business, results of operations and financial condition. To the extent a public health outbreak, epidemic or pandemic adversely affects our business and financial results, it may also have the effect of heightening other risks described in this “Risk Factors” section.

Aspects of our business, and our customers’ businesses, which our solutions and services support, can be impacted by events in the insurance and automotive collision industries which are beyond our control. Certain trends in the automotive industry, including adoption of AI solutions, the continued adoption of semi-autonomous or autonomous vehicles and the advent of improved automotive safety features, may potentially impact the future market for, and operations of, the P&C insurance and automotive collision industries. While the impacts and timing of these changes are currently unknown, if this has an adverse impact on the P&C insurance or the automotive collision industries, it could have an adverse impact on our future result of operations.

OurMacroeconomic factors impacting the principal industries we serve could adversely affect adoption, usage, or average selling prices of our solutions and our customers may defer or forego purchases of our solutions or services in the event of weakened global economic conditions, political transitions or industry consolidation.

We expect to continue to derive most of our revenue from the solutions and additional services we provide to the P&C insurance industry, the automotive collision industry, and the P&C insurance economy generally, including the automotive industry. Given the concentration of our business activities in these industries, we will be particularly exposed to certain economic downturns affecting them. U.S. and global market and economic conditions have been, and continue to be, disrupted and volatile. General business and economic conditions that could affect us and our customers include fluctuations in economic growth, inflation, debt and equity capital markets, liquidity of the global financial markets, the availability and cost of credit, investor and consumer confidence, and the strength of the economies in which our customers operate. A poor economic environment could result in significant decreases in demand for our solutions, including the delay or cancellation of current or anticipated projects, or could present difficulties in collecting accounts receivables from our customers due to their deteriorating financial condition. OurAlso, acquisitions of customers or potential customers can delay or cancel sales cycles or result in existing customersarrangements maybeing cancelled or not being renewed, and because we cannot predict the timing or duration of such acquisitions, our results of operations could be acquiredmaterially by or merged into other entities that use our competitors’ products, or they may decide to terminate their relationships with us for other reasons. As a result, our sales could decline if an existing customer is merged with or acquired by another company that has a poor economic outlook or is closed.impacted.

In addition, a significant portion of our operating costs are comprised of personnel-related expenses. We have experienced and may, in the future, experience increased labor costs as well as other costs necessary to conduct our business. To the extent we cannot pass along such increased costs to our customers, our results of operations and financial condition may be adversely affected. We have a substantial number of long-term customer contracts, which means we cannot modify the prices paid by the customers under such contracts to pass along such increased costs. Although somemany of our customer contracts include price increases over time, we cannot be sure that those increases will match increased costs in timing or amount.

The market for our solutions is competitive. The competitors we face in any sale opportunity may change depending on, among other things, the line of business making the purchase, the solutions(s) being sold, the geography in which the customer is operating, and the size of the customer to which we are selling. These competitorsCompetitors may compete on the basis of price, the time and cost required for software implementation, custom development, or unique solution features or functions. Outside of the U.S., we are more likely to compete against vendors that may differentiate themselves based on local advantages in language, market knowledge, existing relationships with customers and content applicable to that jurisdiction.

We expect the intensity of competition to remain high in the future, as the amount of capital invested in current and potential competitors, including insurance technology companies, has increased significantly in recent years. As a result, our competitors or potential competitors may develop improved product or sales capabilities, or even a technology breakthrough that disrupts our market. The emerging availability of “off-the-shelf” AI models and of agentic AI may increase the ability of existing and new competitors to develop technology and applications which may compete with our solutions.solutions or alter how our customers engage with our solutions in unexpected ways. Continuing intense competition could result in increased pricing pressure, increased sales and marketing expenses, and greater investments in research and development, each of which could negatively impact our profitability. Current and potential competitors may be able to devote greater resources to, or take greater risks in connection with, the development, promotion, and sale of their products than we can devote to ours, which could allow them to respond more quickly than we can to new technologies and changes in customer needs, thus leading to their wider market acceptance. We may not be able to compete effectively and competitive pressures may prevent us from acquiring and maintaining the customer base necessary for us to increase our revenue and profitability.

As technology continues to develop at a rapid pace, both within the insurance economy and more broadly across the insurance ecosystem, the possibility of the development of technological advancements made by other firms will increase. If we are unable to internally develop or acquire suitable alternatives to such developments or otherwise deploy competitive offerings our business and growth opportunities may be challenged. Additionally, certain insurance ecosystem customers may seek to develop internal solutions which could potentially compete with related offerings from us in whole or part. Technologies such as enhanced modeling, AIAI, including the adoption of agentic AI, and machine learning technology may offer certain firms, including insurance carriers, the opportunity to make rapid advancements in the development of tools or processes which may impact the industry broadly.

Sales cycles for some of our solutions are complex and can be lengthy and unpredictable, requiring pre-purchase evaluation by a significant number of employees in our customers’ organizations, and can involve a significant operational decision by our customers. Our sales efforts involve educating our customers about the use and benefits of our solutions, including in the technical capabilities and the potential cost savings achievable by organizations using our solutions. For larger business opportunities, such as converting a new insurance customer, customers undertake a rigorous pre-purchase decision-making and evaluation process which typically involves due diligence and reference checks. As our portfolio of solutions expands, sales efforts may need to be targeted to disparate groups within our customers’ and potential customers’ organizations, which will increase the time and investment necessary to compete a sale.sale, and we may also need to invest in new ways of selling to or interacting with our customers, which may require changes to resources, approach, marketing or other business methods and which may not be immediately or ultimately successful or efficient. The foregoing changes may require us to incur up-front costs and expenses which may not be recouped if the changes are not ultimately successful. We invest a substantial amount of time and resources in our sales efforts without any assurance that our efforts will produce sales. Even if we succeed at completing a sale, we may be unable to predict the size or term of an initial SaaS arrangement until very late in the sales cycle. In addition, we sometimes commit to include specific functions in our base solutions offering at the request of a customer or group of customers. Providing this additional functionality may be time consuming and may involve factors that are outside of our control. Customers may also insist that we commit to certain timeframes in which systems built around our solutions will be operational, or that once implemented our solutions will be able to meet certain operational requirements. Our ability to meet such timeframes and requirements may involve factors that are outside of our control, and failure to meet such timeframes and requirements could result in us incurring penalties, costs and/or additional resource commitments, which would adversely affect our business and results of operations.

Developing softwaresoftware, including AI capabilities, is time consuming and costly, and investment in development may involve a long payback cycle. Our research and development expenses were $201.5$227.5 million, or 21%22% of our total revenue, for the year ended December 31, 2024.2025. Including the amount we capitalized for internal use software of $43.1$52.2 million, our total spend was 26%27% of total revenue for the year ended December 31, 2024.2025. Our future plans include significant investments to develop, improve and expand the functionality of our solutions, which we believe is necessary to maintain our competitive position. However, we may not recognize significant revenue from these investments for several months or years, or the investments may not yield any additional revenue.

Our insurance industry customers are subject to extensive government regulations, mainly at the state level in the U.S. and at the country level in our non-U.S. markets. Some of these regulations relate directly to our software and services, including regulations governing the use of total loss, workers' compensation, disability and casualty claims processing, and photo estimating software. If our insurance company customers fail to comply with new or existing insurance regulations, including those applicable to use of our software and services, they could lose their certifications to provide insurance and/or reduce their usage of our software and services, either of which would reduce our revenues. We have in the past and continue to spend considerable time and resources working with our customers to help them navigate these regulations, including Department of Insurance market conduct examinations and defending against class action lawsuits. If our solutions or services are found to be defective, we could be subject to liability. In addition, future regulations could force us to implement costly changes to our software and/or databases or have the effect of prohibiting or rendering less valuable one or more of our offerings. Also, we are subject to direct regulation in some markets, and our failure to comply with these regulations could significantly reduce our revenues or subject us to government sanctions.

As a software business, we face risks of cyber-attacks, including ransomware and phishing attacks, social engineering attacks, computer break-ins, theft, fraud, misappropriation, misuse, denial-of-service attacks, and other improper activity that could jeopardize the performance of our platform and solutions and expose us to financial and reputational impact and legal liability, especially with regards to regulators such as the Federal Trade Commission (the “FTC”), which has become increasingly aggressive in prosecuting alleged failure to secure personal data as unfair and deceptive acts or practices under the Federal Trade Commission Act. Furthermore, such adverse impact could be in the form of theft of our or our customers’ confidential information, the inability of our customers to access our systems, or the improper re-routing of customer funds through fraudulent transactions or other frauds perpetrated to obtain inappropriate payments and may result from accidental events (such as human error) or deliberate attacks. To protect the information we collect and our systems, we have implemented and maintain commercially reasonable security measures and information security policies and procedures informed by requirements under applicable law and recommended practices, in each case, as applicable to the data collected, but we cannot be sure that such security measures will be sufficient. In some cases, we must rely on the safeguards put in place by third parties to protect against security threats. These third parties, including vendors that provide products and services for our operations, could also be a source of security risk to us in the event of a failure of their own security systems and infrastructure. Our network of business application providers could also be a source of vulnerability to the extent their business applications interface with ours, whether unintentionally or through a malicious backdoor. We cannot, in all instances, review the software code included in third-party integrations. Although we vet and oversee such vendors, we cannot be sure such vetting and oversight will be sufficient. We also exercise limited control over these vendors, which increases our vulnerability to problems with services they provide. Any errors, failures, interruptions or delays experienced in connection with these vendor technologies and information services or our own systems could negatively impact our relationships with partners and adversely affect our business and could expose us to liabilities. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently andfrequently, generally are not recognized until launched against a target, and may be difficult to detect for long periods of time, we or these third parties may be unable to anticipate these techniques or to implement adequate preventative measures. With the increasing frequency of cyber-related frauds to obtain inappropriate payments, we need to ensure our internal controls related to authorizing the transfer of funds are adequate. We may also be required to expend resources to remediate cyber-related incidents or to enhance and strengthen our cyber security. Any of these occurrences could create liability for us, put our reputation in jeopardy, and adversely impact our business.

We use machine learning and AI technologies in our solutions and business, and we are making investments in expanding the use of AI solutions, including ongoing deployment and improvement of features using AI technologies. The introduction of AI technologies into new or existing solutions may result in new or enhanced governmental or regulatory scrutiny, scrutiny by our customers or potential customers, litigation, confidentiality or security risks, ethical concerns, legal liability, or other complications. Compliance with new or changing laws, regulations, industry standards or customer requirements relating to AI may impose significant operational costs and may limit our ability to develop, deploy or use AI technologies. A failure on our part to develop solutions to permit compliance with regulatory regimes and/or our customers’ requirements may result in unforeseen costs or delays deploying new and improved features using AI technologies. Furthermore, while we aim to develop and use AI responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise. Uncertainty around new and emerging AI technologies may require additional investment in the development and maintenance of proprietary datasets and machine learning models, development of new approaches and processes to provide related to the collection and use of training data, and development of appropriate protections and safeguards for handling the use of customer data with AI technologies, which may be costly and could impact our expenses. AI technologies incorporated into our solutions and business processes may use algorithms, datasets, or training methodologies that may be flawed or contain deficiencies that may be difficult or impossible for us to detect during testing, including as a result of the use of biased or insufficient training data. Any of the foregoing may result in decreased demand for our solutions, harm to our business, results of operations or reputation, legal liability, regulatory action or failure to achieve expected results including if use products or enable or offer solutions that draw scrutiny or controversy due to their perceived or actual impact on customers or on society as a whole. In addition, third parties may deploy AI technologies in a manner that reduces customer demand for our solutions or alters how our customers choose to engage with our solutions.

We rely on independent third parties to provide certain services to us. The state of the law regarding independent contractor status varies and is subject to change based on court decisions, legislation, and regulation. For example, at the federal level, the Department of Labor published a final rule in January 2024 on independent contractor status. Meanwhile, the National Labor Relation Board (“NLRB”) modified its own independent contractor standard under the National Labor Relations Act (“NLRA”) in a decision published in June 2023. Furthermore, theThe tests governing the determination of whether an individual is considered to be an independent contractor or an employee are typically fact sensitive andsensitive, vary from jurisdiction to jurisdiction.jurisdiction and may change over time. We may be subject to claims that certain independent contractors should be treated as our employees. Adverse determinations regarding the status of any of our independent contractors could, among other things, entitle such individuals to the reimbursement of certain expenses and to the benefit of wage-and-hour laws, and could result in the Company being liable for income taxes, employment, social security, and withholding taxes and benefits for such individuals, and penalties and interest related to any unpaid amounts.

We expect to continue to grow, in part, by making targeted acquisitions in addition to our organic growth strategy. Our business strategy includes the potential acquisition of shares or assets of companies with software, technologies or businesses complementary to ours, both domestically and globally. Our strategy also includes alliances with such companies. Acquisitions and alliances, including our recent acquisition of EvolutionIQ, Inc.,alliances may result in unforeseen operating difficulties and expenditures and may not result in the benefits anticipated by such corporate activity.

Acquisitions and alliances may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for ongoing development of our current business. In addition, we may be required to make additional capital investments or undertake remediation efforts to ensure the success of our acquisitions, which may reduce the benefits of such acquisitions. We also may be required to use a substantial amount of our cash or issue debt or equity securities to complete an acquisition or realize the potential of an alliance, which could deplete our cash reserves and/or dilute our existing stockholders and newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders. Additionally, competition within the software industry for acquisitions of businesses, technologies and assets has been, and is expected to continue to be, intense. Acquisitions could become the target of regulatory reviews, which could lead to increased legal costs, or could potentially jeopardize the consummation of the acquisition. As such, even if we are able to identify an acquisition that we would like to pursue, the target may be acquired by another strategic buyer or financial buyer such as a private equity firm, or we may otherwise not be able to complete the acquisition on commercially reasonable terms, if at all.

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

Our business has been built upon two foundational pillars: automotive insurance claims and automotive collision repair. For decades we have delivered leading software solutions to both the insurance and repair industries, including pioneering Direct Repair Programs (“DRP”) in the United States (“U.S.”) beginning in 1992. DRP connects auto insurers and collision repair shops to create business value for both parties, and requires digital tools to facilitate interactions and manage partner programs. Insurer-to-shop DRP connections have created a strong network effect for CCC’s platform, as insurers and repairers both benefit by joining the largest network to maximize opportunities. This has led to a virtuous cycle in which more insurers on the platform drives more value for the collision shops on the platform, and vice versa.

We believe we have become a leading insurance and repair SaaS and AI provider in the U.S. by increasing the depth and breadth of our SaaS offerings over many years. Our insurance solutions help insurance carriers manage mission-critical workflows across the claims lifecycle, while building intelligent experiences for their customers. Our software integrates seamlessly with both legacy and modern systems and enables insurers to rapidly innovate on our platform. Our repair solutions help collision repair facilities achieve better performance throughout the collision repair cycle by digitizing processes to drive business growth, streamline operations, and improve repair quality. We have more than 300 insurers on our network, connecting with more than 30,500 repair facilities through our multi-tenant cloud platform. We believe our software is the architectural backbone of insurance DRP systems and is a primary driver of material revenue for our collision repair shop customers and a source of material efficiencies for our insurance carrier customers.

Our platform is designed to solve the “many-to-many” problem faced by the insurance economy. There are numerous internally and externally developed insurance software solutions in the market today, with the vast majority of applications focused on insurance-only use cases and not on serving the broader insurance ecosystem. We have prioritized building a leading network around our automotive insurance and collision repair pillars to further digitize interactions and maximize value for our customers. We have tens of thousands of companies on our platform that participate in the insurance economy, including insurers, repairers, parts suppliers, and automotive manufacturers. Our solutions create value for each of these parties by connectingenabling them withto connect to our vast network to collaborate with other companies, streamline operations, and reduce processing costs and dollars lost through claims management inefficiencies, or claims leakage. Expanding our platform has added new layers of network effects, further accelerating the adoption of our software solutions.

We have processed more than $1$2 trillion of historical data across our network, allowing us to build proprietary data assets that leverage insurance claims, vehicle repair, automotive parts and other vehicle-specific information. We believe we are uniquely positioned to provide data-driven insights, analytics, and AI-enhanced workflows that strengthen our solutions and improve business outcomes for our customers. Our AI solutions streamline existing insurance and repair processes including vehicle damage detection, claim triage, claim handling, repair estimating, intelligent claim review, and claim subrogation. We deliver real-world AI with more than 100125 U.S. auto insurers and more than 10,00015,000 U.S. collision repairers actively using AI-powered solutions in production environments.

One of the primary obstacles facing the insurance economy is increasing complexity which is driven by technological advancements, supply-chain disruption, social inflation, medical inflation, and Internet-of-Things (“IOT”) data. We believe digitization plays a critical role in managing this growing complexity while meeting consumer expectations. Our technology investments are focused on digitizing complex processes and interactions across our ecosystem, and we believe we are well positioned to power the insurance economy of the future with our data, network, and platform.

While our position in the insurance economy is grounded in the automotive insurance sector, the largest Property & Casualty (“P&C”) insurance sector in the U.S. representing nearly half of P&C DWP,Direct Written Premiums (“DWP”), we believe our integrations and cloud platform are capable of driving innovation across the broader insurance economy. Our customers are increasingly looking for CCC to expand its solutions to other parts of their business where they can benefit from our technology, service, and partnership. In response, we are investing in new solutions that we believe will enable us to digitize the entire automotive claims lifecycle, and over time expand into adjacencies including other insurance lines. For example, CCC’s acquisition of EvolutionIQ Inc. (“EvolutionIQ”) in January 2025 added claims solutions in disability and workers’ compensation insurance lines to CCC’s solution suite.

We have strong customer relationships in the end-markets we serve, and these relationships are a key component of our success given the long-term nature of our contracts and the interconnectedness of our network. We have customer agreements with more than 300 insurers (including carriers, self-insurers and other entities processing insurance claims), including 2627 of the top 30 automotive insurance carrierscarriers, and 9 of the top 15 disability insurance carries in the U.S., based on DWP, and hundreds of regional carriers. We have more than 35,000 total customers, including more than 30,500 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), more than 5,5006,000 parts and diagnostics suppliers, 1214 of the top 15 automotive manufacturers based on newvehicles vehiclein sales,operation, and numerous other companies that participate in the insurance economy.

We generate revenue through the sale of software subscriptions and other revenue, primarily from professional services. We generated $944.8$1,057.0 million of revenue for the year ended December 31, 2024,2025, an increase of 9.1%11.9% from the prior year. Net income for the year ended December 31, 20242025 was $31.2$1.7 million, compared to a net lossincome for the year ended December 31, 20232024 of $90.1$31.2 million. The net loss for the year ended December 31, 2023, was mainly due to $82.7 million of goodwill and intangible asset impairment charges specific to the Company’s China reporting unit. Adjusted EBITDA increased $44.0$38.7 million, or 12%,9.7%, year-over-year to $397.4$436.0 million. See our reconciliation of net income (loss) to Adjusted EBITDA within the section titled “Non-GAAP Financial Measures.”

The Company’s consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form 10-K include the accounts of the Company and its consolidated subsidiaries and were prepared in accordance with GAAP. Intercompany transactions and balances are eliminated in consolidation. The consolidated financial statements include 100% of the accounts of wholly-owned and majority-owned subsidiaries. The ownership interest of the minority investor is recorded as a non-controlling interest in CCCIS Cayman Holdings Limited (“CCC Cayman”), the parent of the Company’s China operations. As of December 31, 2024, there is not any non-controlling interest in a subsidiary.subsidiary as of December 31, 2025.

During January 2025, the Company completed its acquisition of EvolutionIQ, Inc. (“EvolutionIQ”), a privately held company that provides AI-powered guidance for disability and injury claims management. Leveraging EvolutionIQ’s platform, the acquisition will broaden the Company’s portfolio of AI-based solutions available to its insurance customers.

InThe exchangeCompany foracquired all the outstanding shares of EvolutionIQ,EvolutionIQ thein Companyexchange paidfor total consideration of $730$674.3 million,million netupon closing of cashthe acquired,acquisition, subject to certain post-closing adjustments. Before post-closing adjustments, the total consideration paid to the selling shareholders consisted of 58.9%62.4% in cash and 41.1%37.6% in shares of CCC’s common stock. The cash consideration paid to the selling shareholders was funded through cash on hand and an incremental term loan in an aggregate principal amount of $225 million (the “Incremental Term Loan”).

In conjunction with the acquisition of EvolutionIQ, the Company entered into theAmendment third amendmentNo.3 to the 2021 Credit Agreement (“Third Amendment”) that provided the Company with an Incremental Term Loan for $225 million. PriorImmediately toafter the FourthThird Amendment (as defined below),Amendment, the Incremental Term Loan was repayable in quarterly installments in an amount equal to 0.25% of the original principal amount, with the balance payable at maturity, on September 21, 2028.

PriorImmediately toafter the FourthThird Amendment, the interest rate per annum applicable to the Incremental Term Loan was based on a fluctuating rate of interest, determined by the Company’s leverage ratio, as defined in the 2021 Credit Agreement, as amended. In connection with the Fourth Amendment,Amendment (as defined below), the Incremental Term Loan was refinanced together with other term loans on the terms outlined in the following paragraph.

On January 23, 2025, the Company entered into theAmendment fourthNo. amendment4 (the “Fourth Amendment”) to the 2021 Credit Agreement. Pursuant to the terms of the Fourth Amendment, (i) the Company incurred incremental term loans in an aggregate principal amount of $225 million, which were used to (i) refinance certain outstanding incremental term loans (including the Incremental Term Loan), (ii) extend the maturity of all term loans under the 2021 Credit Agreement was extended to January 23, 2032, (iii) remove the credit spread adjustment applicable to Secured Overnight Financing Rate (“SOFR”) loans,loans under the 2021 Credit Agreement was removed, and (iv) reduce the interest rate margin applicable to all term loans under the 2021 Credit Agreement was removed. From and after the Fourth Amendment, the interest rate per annum applicable to the followingTerm Loan is based on a fluctuating rate of interest equal to the sum of an applicable rate and, at the Company’s election from time to time, either:

(1) 1.00% in the case of base rate loans, and 2.00% in the case of SOFR (or EuriborEuro Interbank Offered Rate (“EURIBOR”) or Sterling Overnight Index Average (“SONIA”)) loans, and 2.00%, in the case of SOFR (or EuriborEURIBOR or SONIA) loans, if S&P and Moody’s Debt First Lien Leverage Ratio Ratings (as defined in the Credit Agreement) are below BB- (with a stable outlook) or below Ba3 (with a stable outlook) (or if for any reason this category does not apply, including if the Borrower has only one Debt Rating or the Borrower does not have any Debt Rating),; andor (2) 0.75%, in the case of base rate loans, and 1.75%, in the case of SOFR (or EuriborEURIBOR or SONIA) loans, if S&P and Moody’s Debt First Lien Leverage Ratio Ratings are both BB- (with a stable outlook) or better and Ba3 (with a stable outlook) or better.

The following are key factors affecting our operating results in the years endingended December 31, 2024,2025, 20232024 and 20222023:

Conversion and implementation of new customers: We focus significant resources on attracting and onboarding new customers across the various segments of the P&C insurance economy we serve. We have a strong track record of new customer conversion across all our markets. On average, customer implementations take less than three months to complete. A significant portion of ourOur sales force is focused on converting new customer accounts across our industry, and this will continue to be a focus of our business for the foreseeable future.

Investment in R&D: We have a strong track record of innovation and new solution delivery with our customers. We remain committed to delivering market-leading technology including AI solutions for the P&C insurance economy. We believe that maintaining our software solution leadership is imperative to our growth plan. As a result, we intend to continue making significant investments in research and development to improve and expand our software and AI solutions. Our research and development expenses totaled $201.5$227.5 million, $173.1$201.5 million and $157.0$173.1 million in the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. We expect that research and development will remain a key investment area for the foreseeable future.

Investment in Sales and Marketing: Our sales and marketing efforts are a key component of our growth strategy. Our investments in this area have enabled us to build and sustain our customer base while creating long-term customer relationships. We plan to continue to invest in our sales and marketing efforts, including adding sales personnel and expanding marketing activities, to support our business growth. Our salesselling and marketing expenses totaled $142.2$174.8 million, $140.9$142.2 million and $119.6$140.9 million, in the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. As the business continues to grow, we expect salesselling and marketing expenses to increase in absolute dollars for the foreseeable future.

These costs include costs of software subscription and professional services revenue. Our cost of revenues is primarily comprised of personnel costs, including stock-based compensation and costs of external resources used in the delivery of services to customers, including software configuration, integration and implementation services, and customer support activities, third party costs related to hosting the Company’s software for its customers, internal support of production infrastructure, IT security and production environment expenses, depreciation expense,expense costrelated ofto softwareinvestments production,in new and enhanced customer solutions and platform development, and professional service, license and royalty fees paid to third parties. We expect cost of revenues, exclusive of amortization and impairment of acquired technologies, to increase in absolute dollars as we continue to hire personnel, require additional cloud infrastructure and incur data licensing and royalty fees in support of our revenue growth.

Interest expense comprises interest incurred on our indebtedness.indebtedness (Note 15), and the Promissory Note to a minority investor (Note 18). We expect interest expense to vary each reporting period depending on the amount of outstanding indebtedness and prevailing interest rates.

Change in fair value of warrant liabilities comprises fair value adjustments of the private warrants assumed in connection with the Business Combination. In May 2024, we redeemed all of our outstanding private warrants and none were outstanding as of December 31, 2024. As all outstanding private warrants were redeemed in May 2024, no gain or loss on remeasurement of the private warrants was recognized for the year ended December 31, 2025.

Other (Expense) Income-Net

Other (expense) income-net consists primarily of changes in fair value of our interest rate swap and cap derivative instruments and income received from our interest rate swap and cap derivative instruments, as well as foreign currency transaction gains and losses related to the impact of transactions denominated in a foreign currency.

Revenue increased by $78.4$112.2 million to $944.8$1,057.0 million, or 9.1%,11.9%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. The increase in revenue was primarily a result of 6%5% growth from existing customer upgrades and expanding solution offerings to these existing customerscustomers, 4% growth as wella asresult of the acquisition of EvolutionIQ, and 3% growth from new customers.

Cost of revenues, exclusive of amortization and impairment of acquired technologies, increased $18.7$40.7 million to $222.0$262.7 million, or 9.2%,18.3%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. The increase was primarily due to a $6.5$15.9 million increase in depreciation expense related to investments in new and enhanced customer solutions and platform development, $9.5 million increase in third party fees and direct costs associated with our revenue growth, a $5.8 million increase in depreciation expense related to additional investments in new and enhanced customer solutions and platform development, a $4.7$8.1 million increase in personnel-related costs, including stock-based compensation, and a $1.2$8.3 million increase in IT related costs.

Amortization of acquired technologies was $9.0$17.5 million and $26.5$9.0 million for the years ended December 31, 20242025 and 2023,2024, respectively. The decreaseincrease was primarily due to amortization recognized on acquired technologies as part of the acquisition of EvolutionIQ in January 2025, partially offset by certain acquired technology intangible assets reaching the end of their useful life in April 2024.

Gross profit increased by $77.6$63 million to $713.8$776.8 million, or 12.2%,8.8%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. Our gross profit margin increasedwas 73.5% for the year ended December 31, 2025 compared to 75.6% for the year ended December 31, 2024 compared to 73.4% for the year ended December 31, 2023.2024. The increase in both gross profit andreflects gross profit margin was primarily due to increasedhigher software subscription revenues,revenues and enhanced economies of scale resulting from fixed cost arrangementsarrangements, andincluding lowercontributions amortizationfrom ofthe acquiredJanuary technologies,2025 EvolutionIQ acquisition. These factors were partially offset by thean increase in depreciationcost expenseof related to additional investments in new and enhanced customer solutions and platform development.revenue.

Research and development expense increased by $28.4$26 million to $201.5$227.5 million, or 16.4%,12.9%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. The increase was primarily due to a $21.7$46.1 million increase in personnel-related costs, including a $9.9 million increase in stock-based compensation, primarily due to the acquisition of EvolutionIQ in January 2025, partially offset by a $6.2$10.0 million increasedecrease in IT related costs, and a $3.3$9.2 million decreaseincrease in the amount of capitalized time on new and enhanced customer solutions and platform development, partially offset byand a $1.9$0.8 million decrease in consulting and professional service costs.

Selling and marketing expense increased by $1.4$32.6 million to $142.2$174.8 million, or 1.0%,22.9%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. The increase was primarily due to a $6.3$27.5 million increase in personnel-related costs, including sales incentives and travel costs, partially offset by a $5.1$16.1 million decreaseincrease in stock-based compensation.compensation, primarily due to the acquisition of EvolutionIQ in January 2025, and a $3.1 million increase in consulting and professional service costs.

General and administrative expense increaseddecreased by $26.4$11.6 million to $218.2$206.6 million, or 13.7%,-5.3%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. The increasedecrease was primarily due to a $13.3$23.5 million decrease in stock-based compensation, partially offset by a $7.1 million increase in personnel-related costs, including a $9.4 million increase in stock-based compensation, a $9.4 million increase in professional service costs and a $3.5$1.7 million increase in IT related costs.costs, a $1.5 million increase in office rent, primarily due to the acquisition of EvolutionIQ in January 2025, and a $1.5 million increase in other business taxes.

Amortization of intangible assets was $71.8$74.0 million and $72.0$71.8 million for the years ended December 31, 20242025 and 2023,2024, respectively. The increase in amortization of intangible assets was due to the intangible assets recognized as part of the acquisition of EvolutionIQ in January 2025.

Interest expense increased by $1.0$6.4 million to $64.6$71.0 million, or 1.6%,9.9%, for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. The increase was due to higherinterest incurred on the Promissory Note Payable by CCC Cayman and its subsidiaries issued to a minority investor in May 2025 and interest incurred on an additional $225.0 million term loan as part of the third amendment for the 2021 Credit Agreement, entered into in January 2025, partially offset by lower variable interest rates during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

Other (Expense) Income-Net

OtherFor the year ended December 31, 2025, we incurred other expense-net of $6.2 million, compared to other income-net increased $0.4 million toof $2.2 million for the year ended December 31, 2024 compared to $1.8 million for the year ended December 31, 2023.2024. The increasechange was primarily dueattributable to a $0.7$5.4 million increasereduction in income from the interest rate cap derivative instruments and a $0.5$3.2 million differencechange in the change in fair value of the interest rate cap derivative instruments, partially offset by a $0.8 million decrease in other income.instruments.

Income tax provision is $19.8 million for the year ended December 31, 2025, compared to $13.1 million for the year ended December 31, 2024, compared to $5.5 million for the year ended December 31, 2023.2024. The income tax provision for the year ended December 31, 20242025 was due to the Company’s pretax income. The income tax provision for the year ended December 31, 2023 was primarily due to the Company’s taxable income, after the effect of permanent differences related to stock-based compensation expenseexpense. andThe income tax provision for the impairmentyear ofended certainDecember intangible31, assets.2024 was primarily due to the Company’s pretax income.

We believe that Adjusted Gross Profit, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Gross Profit is defined as gross profit adjusted for amortization of acquired technologies, stock-based compensation and related employer payroll tax,tax and impairment of acquired technologies and contract termination costs.technologies. The Adjusted Gross Margin is defined as Adjusted Gross Profit divided by Revenue.

We believe that Adjusted Operating Expenses, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Expenses is defined as operating expenses adjusted for amortization of intangible assets, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential mergers and acquisitions (“M&A”), litigation proceeds (costs), net and costs in legal matters in which we arewere the plaintiff and related antitrust matters, equity transaction and related costs, including secondary offering costs, debt refinancing costs, change in fair value of contingent consideration,consideration and goodwill and intangible asset impairment charges, lease abandonment charges, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease and income related to divestiture, net.charges.

We believe that Adjusted Operating Income, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Income is defined as operating income (loss) adjusted for amortization, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, litigation (proceeds) costs, net and costs in legal matters in which we are the plaintiff and related antitrust matters, equity transaction and related costs, including secondary offering costs, debt refinancing costs, change in fair value of contingent consideration,consideration and goodwill and intangible asset impairment charges, lease abandonment charges, contract termination costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease and income related to divestiture, net.charges.

We believe that Adjusted EBITDA, as defined below, is useful in evaluating our operational performance distinct and apart from financing costs, certain expenses that may not be indicative of our recurring core business operating results and non-operational expenses. Adjusted EBITDA is defined as net income (loss) adjusted for interest, taxes, amortization, depreciation, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, litigation (proceeds) costs, net and costs in legal matters in which we are the plaintiff and related antitrust matters, equity transaction and related costs, including secondary offering costs, change in fair value of derivative instruments, income from derivative instruments, debt refinancing costs, change in fair value of contingent consideration, change in fair value of warrant liabilities, change in fair value of derivative instruments, income from derivative instruments, goodwill and intangible asset impairment charges, lease abandonment charges, contract termination costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, gain on sale of cost method investment and income related to divestiture, net.charges. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.

We believe that Adjusted Net Income, as defined below, and Adjusted Earnings Per Share are useful in evaluating our operational performance distinct and apart from certain expenses that may not be indicative of our recurring core business operating results. Adjusted Net Income is defined as net income (loss) adjusted for the after-tax effects of amortization, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, litigation (proceeds) costs, net and costs in legal matters in which we are the plaintiff and related antitrust matters, equity transaction and related costs, including secondary offering costs, change in fair value of derivative instruments, debt refinancing costs change in fair value of contingent consideration, change in fair value of warrant liabilities,liabilities change in fair value of derivative instruments,and goodwill and intangible asset impairment charges. lease abandonment charges, contract termination costs, lease overlap costs for the incremental expenses associated with the Company’s new corporate headquarters prior to termination of its then existing headquarters’ lease, gain on sale of cost method investment and income related to divestiture, net.

Other than the business acquisition discussed in the “Recent Developments” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, which has closed and for which payment has been completed, weWe are not currently a party to any material definitive agreement regarding potential investments in, or acquisitions of, complementary business, applications or technologies. However, we may enter into these types of arrangements, which could reduce our cash and cash equivalents or require us to seek additional equity or debt financing. Additional funds from financing arrangements may not be available on terms favorable to us or at all. We may require additional borrowings under our credit arrangements and alternative forms of financings or investments to achieve our longer-term strategic plans.

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 subsequently amended, the “2021 Credit Agreement”).

2021 Credit Agreement — The 2021 Credit Agreement consistsoriginally consisted of an $800.0 million term loanloan, (the “Termproceeds Bof Loan”)which, andwith cash on hand were used to repay all outstanding borrowings under the Company’s previous credit agreement. The 2021 Credit Agreement also includes a revolving credit facility (“2021 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”).million. 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.

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the forward-looking statements included herein. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Cautionary NoteStatement Regarding Forward-Looking Statements” and “Risk Factors” as set forth elsewhere in this Quarterly Report on Form 10-Q.

Comparison of the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025

Revenues increased by $29.7$25.5 million to $281.3$285.9 million, or 11.8%,9.8%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The Company’s software subscription revenues accounted for $270.1$274.0 million and $242.5$250.6 million, or 96% of total revenue, during the three months ended MarchJune 31,30, 2026 and 2025.2025, respectively.

The increase in revenue was primarily a result of 9%approximately 7% growth from existing customer upgrades and expanding solution offerings to these existing customers and 3%approximately 2% growth from new customers.

Cost of revenues increased by $5.8$8.9 million to $72.4$75.3 million, or 8.7%,13.3%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Cost of revenues, exclusive of amortization of acquired technologies, increased by $5.8$8.9 million to $68.0$70.9 million, or 9.3%,14.3%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increase was primarily due to a $3.3$5.1 million increase in information technology (“IT”) related costs, a $1.8 million increase in third-party fees and direct costs associated with revenue growth, and a $2.3$2.8 million increase in personnel-related costs.costs, partially offset by a $1.9 million decrease in stock-based compensation expense.

Amortization of acquired technologies was $4.4 million for the three months ended MarchJune 31,30, 2026 and three months ended MarchJune 31,30, 2025.

Gross profit increased by $23.9$16.6 million to $208.9$210.6 million, or 12.9%,8.6%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. Our gross profit margin was 74.3%73.7% for the three months ended MarchJune 31,30, 2026, compared to 73.5%74.5% for the three months ended MarchJune 31,30, 2025. The increase in gross profit was due to increased software subscription revenues and economies of scale resulting from fixed cost arrangements.

Research and development expense decreased by $9.3$6.9 million to $52.5$53.0 million, or 15.0%,11.6%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily due to a $6.3$3.6 million increase in the amount of capitalized time on platform and customer solution enhancements and a $2.6 million decrease in stock-based compensation expense, a $4.9 million decrease in IT related costs, partially offset by a $3.1 million increase in personnel and resource related costs.expense.

Selling and marketing expensewas decreasedrelatively byflat $8.9at $43.5 million to $39.4 million, or 18.4%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The decreaseimmaterial waschange dueprimarily toreflected offsetting movements, including a $3.9 million decrease in personnel-related costs and a $5.0$4.2 million decrease in stock-based compensation.compensation and a $4.1 million increase in personnel-related costs.

General and administrative expense decreasedincreased by $17.5$0.4 million to $49.6$48.0 million, or 26.1%,0.8%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The decreaseincrease was primarily due to a $17.2$2.8 million increase in personnel-related costs, a $2.5 million increase in professional service costs and a $1.5 million increase in IT related costs, mostly offset by a $6.8 million decrease in stock-based compensation.

Amortization of intangible assets was $18.5 million for the three months ended MarchJune 31,30, 2026 and 2025.

Interest expense increased by $3.4$2.5 million to $20.3$20.4 million, or 19.9%,14.1%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increase was due to the interest incurred on an additional $300 million term loan as part of the fifthFifth amendmentAmendment to the 2021 creditCredit agreementAgreement entered into in December 2025, partially offset by lower variable interest rates during the three months ended MarchJune 31,30, 2026.2026 as compared to the variable interest rates during the three months ended June 30, 2025.

Interest income decreased by $1.0$0.5 million to $0.9$0.7 million, or 51.6%,39.1%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, due to lower average balances on interest earning deposits and money market funds during the three months ended MarchJune 31,30, 2026.2026 compared to the balances during the three months ended June 30, 2025.

We recognized other income—Net of $4.0$2.6 million for the three months ended MarchJune 31,30, 2026 compared to other expense—Net of $5.1$2.1 million for the three months ended MarchJune 31,30, 2025. The income recognized during the three months ended MarchJune 31,30, 2026 was primarily due to the decrease in the fair value of derivative instrument liabilities, driven by the fair value of the Company’s three interest rate swap agreements. The expense recognized during the three months ended MarchJune 31,30, 2025 was primarily due to the increase in the fair value of derivative instruments liabilities,instruments, driven by the fair value of the Company's three interest rate swap agreements entered into during the three months ended MarchJune 31,30, 2025.

The Company recognized an income tax provision of $18.0$9.8 million and an income tax benefit of $13.4$7.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The income tax provision during the three months ended MarchJune 31,30, 2026 was primarily due to the Company's pre-tax book income, as well as the tax impact related to stock-based compensation expense. The income tax benefit for the three months ended MarchJune 31,30, 2025 was primarily due to the Company’s year-to-date pre-tax book loss.loss and the annual effective tax rate impact related to stock based compensation.

The following table reconciles Gross Profit to Adjusted Gross Profit for the three and six months ended MarchJune 31,30, 2026 and 2025:

We believe that Adjusted Operating Expenses, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Expenses is defined as operating expenses adjusted for amortization of intangible assets, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential mergers and acquisitions (“M&A”), costs related to equity transactions, including secondary offerings, litigation expenses (proceeds), net for matters in which we are the plaintiff and related antitrust matters,matters and debt refinancing costs and costs related to equity transactions, including secondary offerings.costs.

The following table reconciles operating expenses to Adjusted Operating Expenses for the three and six months ended MarchJune 31,30, 2026 and 2025:

We believe that Adjusted Operating Income, as defined below, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results. Adjusted Operating Income is defined as operating income (loss) adjusted for amortization of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, litigation proceeds, debt refinancing costs and costs related to equity transactions, including secondary offerings.offerings, litigation expenses (proceeds), net, and debt refinancing costs.

The following table reconciles operating income (loss) to Adjusted Operating Income for the three and six months ended MarchJune 31,30, 2026 and 2025:

We believe that Adjusted EBITDA, as defined below, is useful in evaluating our operational performance distinct and apart from financing costs, certain expenses and non-operational expenses. Adjusted EBITDA is defined as net income (loss) adjusted for interest, taxes, amortization of intangible assets and acquired technologies, depreciation, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, litigation proceeds,expenses (proceeds), net, debt refinancing costs, costs related to equity transactions, including secondary offerings, change in fair value of derivative instruments, and income from derivative instruments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.

The following table reconciles net income (loss) to Adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025:

We believe that Adjusted Net Income, as defined below, and Adjusted Earnings Per Share are useful in evaluating our operational performance distinct and apart from financing costs, certain expenses and non-operational expenses. Adjusted Net Income is defined as net income (loss) adjusted for the after-tax effects of amortization of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, costs associated with the acquisition and integration of completed and potential M&A, litigation expenses (proceeds), net for matters in which we are the plaintiff and related antitrust matters, debt refinancing costs, costs related to equity transactions, including secondary offerings and the change in fair value of derivative instruments.

The following table reconciles net income (loss) to Adjusted Net Income and Adjusted Earnings per Share for the three and six months ended MarchJune 31,30, 2026 and 2025:

The following table reconciles net cash provided by operating activities to Free Cash Flow for the three and six months ended MarchJune 31,30, 2026 and 2025:

We have financed our operations with cash flows from operations. The Company generated $57.5$159.0 million of cash flows from operating activities during the threesix months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, the Company had cash and cash equivalents of $36.9$115.9 million, a working capital surplus of $50.6$118.4 million and an accumulated deficit totaling $1,780.3$1,759.5 million. As of MarchJune 31,30, 2026, the Company had $1,287.7$1,284.5 million aggregate principal outstanding on its term loan.