CCC Intelligent Solutions Holdings Inc. (CCC) Q1 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the CCC Intelligent Solutions First Quarter Fiscal 2026 Earnings Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Warmington, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and thank you all for joining us today to review CCC's first quarter 2026 financial results, which we announced in the press release issued earlier this morning. Joining me on the call are Githesh Ramamurthy, CCC's Chairman and CEO; Brian Herb, CCC's CFO; and Tim Welsh, CCC's President. The forward-looking statements that we make today about the company's results and plans are subject to risks and uncertainties that may cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the earnings releases available on our Investor Relations website and under the heading Risk Factors in our 2025 annual report on Form 10-K filed with the SEC. Further, these comments and the Q&A that follows are copyrighted today by CCC Intelligent Solutions Holdings Inc. Any recording, retransmission or reproduction or other use of the same for profit or otherwise without prior consent of CCC is prohibited and a violation of the United States copyright and other laws. Additionally, while we will provide a transcript of portions of this call, and we've approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in the transcripts. Please note that the discussion on today's call includes certain non-GAAP financial measures as defined by the SEC. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to the company's financial condition and the results of operations. A reconciliation of GAAP to non-GAAP measures is available in our earnings release that is available on our Investor Relations website. Thank you. And now I'll turn the call over to Githesh.

Thank you, Bill, and thanks to all of you for joining us today. We had a strong start to 2026 driven by continued customer demand and adoption. The first quarter total revenue grew 12% to $281 million, above the high end of our guidance. Adjusted EBITDA was $120 million, also above the high end of our guidance and adjusted EBITDA margin expanded approximately 300 basis points year-over-year to 43%. We are now more than a year past the acquisition of EvolutionIQ, and we continue to see strong momentum across the combined business. Today, I want to focus on 3 themes that frame both our near-term momentum and our long-term opportunity. First, why CCC is positioned to thrive in an AI-driven world; second, how the positioning is translating into strong tangible revenue momentum with several of the biggest companies in the world increasing their commitments to both our core and AI solutions; and third, while solving the problems caused by rising complexity for our customers, in the insurance economy is a durable long-term growth driver for CCC. Let me start with why CCC's position to thrive in an AI-driven world, we can do this by first understanding the work our customers need to get done. The insurance economy spans many thousands of companies conducting hundreds of billions of dollars in commerce across tens of millions of unique claim events every year. They operate in a complex, highly regulated industry and may interact with dozens of other companies for any given claim. And the work they need CCC to help them get done are the things that directly drive the operating performance of their business. Take auto insurers, for example, who, on average, pay out about 75% of their revenues on claims. They use the decision engines built into our solutions uniquely configured for their specific needs to help them pay what they owe. They use the CCC network to activate the tens of thousands of companies they need to integrate with to get consumers back to their lives and they use the CCC platform to manage that work end to end. And in fact, they rely on CCC to manage the most complex mission-critical and consequential work they do. This is true not only across our auto insurance customers, but also each of the more than 35,000 businesses we work with. That translates to CCC's economic model. We price our products on the measurable value we provide typically on a 5:1 ROI basis. We have cumulatively invested billions of dollars in our platform and have deep industry-leading functionality, but customers buy our technology because of the real-world outcomes they're able to achieve only by using our solutions to impact the hundreds of billions of dollars we help them process annually. CCC's data is unique in its combination of scale, depth and recency. We have over $2 trillion of historical data that simply does not exist anywhere else. The data is broad, deep and continuously updated in real-time, allowing us to provide benchmarks customers use to assess their operations and to provide hyper-local up to the minute inputs that inform hundreds of billions of dollars in individual payouts and repairs. We also take special pride in the trust our customers, placing us as partners in their business. Our role connecting the ecosystem has been built on decades of consistent, high-quality execution where each participant can feel confident in being able to deliver the best outcome for them and the consumer. Importantly, the outputs generated using our solutions are already accepted and embedded in the core operations of their trading partners. It is, therefore, no surprise that customers are increasingly looking to accelerate their AI ambitions by leveraging the CCC Intelligent Experience Cloud. Our AI solutions have been the fastest-growing part of our portfolio for some time, with the scale that has few equals in vertical software. In Q1, our AI-based solutions drove approximately 1/3 of our overall year-over-year growth, growing at roughly 3.5x the total company growth rate. AI solutions are now approximately 10% of revenue or about $120 million in run rate. These solutions are entirely incremental to our core products with discrete value propositions and ROI that customers validate through intense piloting and testing, demonstrating both the durability of our core solutions and the rapid adoption of our AI tools. While we are tremendously excited about the growth in our AI products, the benefits of marrying AI with deterministic software are becoming increasingly evident to customers. It's not an either/or. It is an end. Governance and trust, our bedrock principles in our industry and the efficiency of the CCC platform is particularly well suited to helping customers manage AI at scale. Our systems efficiently process almost 6 billion transactions per day, giving customers a battle-tested platform that flexibly handles volume spikes and constant adjustments to their operating rules. To summarize our first theme, CCC is positioned to thrive in an AI-driven world because we combine unique, real-time data, embedded workflows and a trusted scale platform that allows customers to deploy AI safely, govern it effectively and realize measurable economic value. My second theme is the strong tangible revenue momentum across the business as several of the biggest companies in the world increased their commitments to both our traditional and AI products. CCC's customer base includes 27 of the top 30 auto insurers in the U.S. by 2024 Direct Written Premium as well as multibillion-dollar repair facility chains. These are some of the largest and most discerning companies in the world with incredible access to leading-edge technology capabilities. We are thrilled that 1 of the top 5 auto insurers in the U.S. by Direct Written Premium renewed and extended its partnership with CCC through a new multiyear enterprise agreement. This agreement covers our entire auto physical damage suite as well as our entire portfolio of AI solutions related to auto physical damage following an extensive 2-year test of those capabilities. The insurer consolidated its APD business on to CCC several years ago, and this new agreement, both renews the core software relationship and adds the full AI layer, resulting in a meaningful step-up in the value of the partnership. Our largest and most sophisticated customers are also deepening their commitment to the CCC platform by expanding the scope of their relationship into casualty. Casualty remains one of the largest growth opportunities for CCC. Our acquisition of EvolutionIQ expanded our capabilities in this area through the creation of MedHub for auto casualty and AI documents insight solution now embedded within the CCC platform. MedHub adds meaningful new functionality that is helping customers manage complex casualty workflows and is helping to advance our pipeline. Last quarter, we announced that Liberty Mutual, the sixth largest auto insurer in the United States and one of the largest P&C insurers globally selected us. They have since begun deploying a significant portion of their casualty business on the CCC platform. In April, we signed a multiyear agreement with Allstate for their third-party casualty business. All of these wins are validation of large customers increasingly recognizing that CCC's platform and comprehensive suite of solutions represent their best path to embracing an AI-driven future. This dynamic is playing out across our entire business, including on the repair facility side. Adoption of our core and AI solutions in the market continues to grow with more than 6,500 repair facilities now using our AI estimating capability. At our industry conference next month, we plan to introduce even more exciting innovations for the repair facilities. In summary, we are seeing this differentiated positioning translate into tangible revenue momentum as some of the largest insurers and repair organizations in the world, deepen and expand their relationships with CCC across both our core software and AI solutions. My third theme is how solving for rising complexity is expanding CCC's value proposition and driving long-term growth. The most important structural trend in the insurance economy is rising complexity. Vehicles are most sophisticated; medical and casualty claims are more involved. Regulatory requirements continue to increase. Every claim requires more decisions, more coordination and more judgment all the time. We see advancing vehicle technology as a significant tailwind for CCC over time with many new product possibilities on the horizon. The multi-decade trend in advancing vehicle safety technology has shown a repeated pattern of frequency reductions being more than offset by increases in severity to fix these systems when they're damaged. That causes claim dollars and complexity to rise, which grows the industry and creates additional growth opportunities for CCC. Over the past decade, personal auto claim counts declined by less than 1% annually while average dollars per claim grew approximately 6% per year, driving about 5% annual growth in total claims dollars paid. We believe that going forward, claims cost growth is going to outpace claim frequency moderation, and our insurance customers will be managing an increasing level of total claims spent. That means our software and AI capabilities remain mission-critical as customers manage growing claim complexity and spend over time. The rising complexity inherent in our industry, combined with the growing appetite across our customer base to adopt both our core and AI solutions, gives us confidence in our long-term growth outlook. Stepping back, the common trend across all 3 themes is rising complexity. As claims become more complex, and customer appetite for AI increases, CCC's platform data and workflows become even more essential giving us confidence in our long-term growth opportunity. To help us navigate towards that future, we have added another experienced technology leader to our Board of Directors, John Schweitzer. John brings more than 3 decades of leadership experience across enterprise technology and global go-to-market organizations, including senior roles at Salesforce, Informatica, SAP and Oracle. With the addition of John, Neil de Crescenzo and Barak Eilam over the last 18 months, we have deliberately strengthened our Board to support platform strength, AI innovation and durable value creation while preserving neutrality across the ecosystem we serve. We are pleased with our strong start to the year and continue to be incredibly excited by our near-term momentum and the long-term opportunity in front of us. With that, I'll turn the call over to Brian, who will walk you through our results in more detail.

Thanks, Githesh. As Githesh outlined, Q1 was a strong start to the year with revenue growth and profitability ahead of expectations, increasing adoption of our AI solutions across our largest and most sophisticated clients and continued execution on our capital allocation priorities, including return of capital to shareholders. Now let's turn to the numbers. I'll review our first quarter 2026 results and then provide guidance for the second quarter and the full year. Total revenue in the first quarter was $281 million, up 12% from the prior year period and above the high end of our revenue range. Please note that all of this growth is organic. Of the 12% growth, 9% was driven by cross-sell, upsell and the adoption of solutions across our existing client base, approximately 3 points of growth came from new logos. Within this position, we did see more than 1 point of impact from a combination of timing and onetime items, including true-ups on subscription contracts and transactional strength in casualty. In the quarter, emerging solutions contributed about 4 points of growth, primarily driven by EvolutionIQ, our AI-based APD solutions, diagnostics and build sheets. Emerging solutions continue to represent an important and expanding part of the portfolio, accounting for approximately 11% of the total revenue in the first quarter of 2026 and growing approximately 50% year-over-year with the largest contribution from our AI solutions. Turning to our key metrics of software gross dollar retention, or GDR, and software net dollar retention or NDR. GDR captures the amount of revenue retained from our client base compared to the prior year period. In Q1 2026, our GDR was 98%, down from 99% last quarter. Please note that since we started reporting this metric, GDR has been between 98% and 99% and is either rounded up or down primarily by repair shop industry churn. We believe the consistency is evidence of the value we deliver and the benefit of participating in the CCC network. Our strong GDR is a core tenet of our predictable and resilient revenue model. Net dollar retention captures the amount of cross-sell and upsell from our existing client base compared to the prior year period as well as volume movements in our auto physical damage client base. In Q1 2026, our NDR was 107%, up compared to our full year NDR in 2025 of 106%. Now I'd like to turn to the income statement in more detail. As a reminder, unless otherwise noted, all metrics are non-GAAP. We provide a reconciliation of GAAP to non-GAAP metrics in our press release. Adjusted gross profit was $216 million for the quarter with an adjusted gross profit margin of 77%, which is up sequentially from 76% and flat year-over-year. The underlying economics of the business continue to demonstrate leverage and scalability, and we remain confident in our ability to progress towards our long-term target of approximately 80% as our newer solutions revenue scale and offsets the impact of higher depreciation from recent investments. In terms of expenses, adjusted operating expense in Q1 2026 was $109 million, which is up 2% year-over-year, reflecting strong cost discipline, nearly flat year-over-year headcount and some phasing benefits of costs that moved into Q2. Adjusted EBITDA for the quarter was $120 million, up 20% year-over-year with an adjusted EBITDA margin of 43%. This was above the high end of the range, reflecting cost efficiencies, some phasing benefits and the flow-through from revenue overperformance in the quarter. Q1 adjusted EBITDA margin expanded over 300 basis points year-over-year. Stock-based compensation as a percent of revenue was 11% in Q1 of 2026. That's consistent with Q4 2025. We expect full-year stock-based compensation in 2026 to be approximately 13% of revenue with a path to single digits as we move into 2027. Now let's turn to the balance sheet and cash flow. We ended the quarter with $37 million in cash and cash equivalents and $1.3 billion of debt. At the end of the quarter, net leverage was 2.7x adjusted EBITDA. We continue to deliver strong free cash flow generation and return the capital to shareholders through share repurchases. Free cash flow in Q1 was $42 million compared to $44 million in the prior year period. Free cash flow on a trailing 12-month basis was $252 million, which is up 7% year-over-year and a trailing 12-month free cash flow margin as of Q1 2026 was 23%, down modestly from 24% as of Q1 2025. We are committed to a disciplined capital allocation framework, which balances investment in the business and capital return to shareholders to deliver long-term shareholder value. In December 2025, we announced a $500 million share repurchase authorization and a $300 million accelerated share repurchase program under that authorization. During Q1, we completed the ASR under which we purchased a total of approximately 43 million shares. Following the completion of the ASR, we repurchased an additional $100 million of stock in the open market during Q1. At the end of Q1, we have returned more than $1 billion to shareholders through repurchases over the last 2.5 years and have $100 million remaining available under the current $500 million Board authorization. I'll now turn to guidance. For Q2 2026, we expect revenue between $283 million to $285 million, representing 9% year-over-year growth at the midpoint. We expect adjusted EBITDA of $111 million to $113 million, a 39% adjusted EBITDA margin at the midpoint. For the full year 2026, we expect total revenue of $1.155 billion to $1.163 billion, which represents approximately 10% year-over-year growth at the midpoint. For adjusted EBITDA, we expect between $484 million to $490 million, which implies a 42% adjusted EBITDA margin at the midpoint. So 3 points to keep in mind as you think about the Q2 and full year guide. First, we have raised the full year revenue guidance from $8.5 million to $9.5 million to now 9% to 10% growth on the back of Q1 strong results and the momentum that we're seeing across the business. Second, in terms of the cascade of revenue growth through 2026, Q1 included more than 1 point of impact from a combination of onetime items and transactional strength in casualty. In addition, in the second half, we're expecting approximately a 1 point revenue headwind as an insurance carrier transitions away their legacy first-party casualty business from us. Third, we remain confident in our ability to drive margin expansion in 2026, consistent with our demonstrated track record. As we've stated on our Q4 call, we expected adjusted EBITDA margin to decline sequentially in Q2 due to phasing of spend and then resume year-over-year margin expansion in the second half of the year. We manage our adjusted EBITDA margin on an annual basis, and the progression is driven by continued cost discipline and the operating leverage in the business. The high end of the guide reflects approximately 100 basis points of margin expansion in both the first and second half of the year. In closing, we feel very good about the financial position of the business and the durability of our operating model. We delivered strong revenue growth, margin expansion and free cash flow, enabling meaningful capital return to shareholders through repurchases, while maintaining a prudent leverage profile. Our capital allocation framework remains disciplined, prioritizing organic investment, balance sheet strength and return of excess capital to shareholders, while remaining highly selective on M&A. Taken together, our predictable operating model, strong cash generation and margin discipline positions us well as we move through 2026. I'll now turn the call back over to Githesh for some additional comments before we begin with Q&A. Thanks.

Before we move into Q&A, I'd like to share one update. As you saw this morning from our announcement, Brian Herb, after more than 6 years with the company, has decided to pursue another opportunity outside of CCC and will be stepping down as our CFO at the end of May. We will certainly miss Brian. And as you know, during his tenure, Brian played a critical role in our evolution, including helping take the company public and serving as a key leader through a period of significant growth and transformation. His leadership helped scale our organization and especially as we advance the commercialization of our AI capabilities, positioning us really well for the future. So on behalf of our Board and the entire CCC team, I want to thank Brian for his many contributions and wish him continued success. I know I speak for Brian as well when I say that he remains a strong believer in the business, a shareholder and a close friend. Rod Christo, Senior Vice President of Finance and Chief Accounting Officer and a 30-year veteran of CCC will become Interim CFO upon Brian's departure. To ensure a smooth transition, Brian will also continue to support the company as an adviser following his departure. And on today's Q&A, we are joined by our President, Tim Welsh. As you will remember, Tim joined about a year ago and his positive impact on our go-to-market execution is evident in the momentum we're seeing across the business today. Operator, we are now ready to take questions. Thank you.

[Operator Instructions] Our first question comes from Saket Kalia with Barclays.

This is Alyssa on for Saket. Great start to the year and congratulations, Brian. We'll miss working with you. Githesh, maybe for you. You called out some nice casualty wins. Can you dig into that business a little bit and talk about who you're replacing here?

Yes. I would say the thing that I can talk about is what we do exceptionally well, which is that our third-party solution replaced an incumbent that they had -- that the customer was using. And we have been working very deeply and closely with the customer and the impact and the investments that we've been talking about for the last several years are truly coming through on the differentiation of our product and our solutions. And after a fair amount of testing, the customer has moved forward with us, and we're truly excited about it. Tim, I don't know if you wanted to add anything to that.

Yes. I would just add a couple of things. First of all, this is an area of long-term strategic focus for us. As Githesh just alluded to, we've been making investments in the casualty business broadly and specifically the third-party business for some time. And we've been paying very close attention to customer needs. And so we've just -- given that strategic focus over a long period, the combination of our tools with the EIQ tools and the consistent listening to customers and adopting our products accordingly has really helped us have this continued success. We're excited about what we've seen so far and look forward to more continued momentum.

Very helpful. And maybe, Brian, my follow-up for you. Just to stay on the theme of casualty here. You mentioned there was some element of volume-based benefit. Can you remind us how the pricing there works and maybe refresh us on how big that business is as a percentage of total?

Yes, happy to. So casualty represents about 10% of total revenue. It's important to note, it is one of the fastest-growing parts of the portfolio as we've talked about the investment that we've put in that product and also just the momentum that's building. As far as the revenue mix, it is a combination of subscription deals, but we also have some deals that are transactional and some deals will have true-ups as well. So what we saw in Q1 on some parts of the transactional business, we saw strength that we highlighted. From a pricing perspective, it's similar to our other products that we do price on an ROI basis and show the value of the client -- show value to clients as we roll those products out.

Our next question comes from Dylan Becker with William Blair.

Appreciated really nice job here. Maybe, Githesh, I appreciate all the color on kind of the industry drivers and the secular drivers supporting kind of the long-term growth outlook. But I was wondering if you could maybe delineate a little bit further. I mean, what's driving kind of the outsized adoption from the larger carriers relative to maybe their preference and need and seeing everything that's going on with AI and needing a viable solution, maybe paired with your maturity of the platform and kind of conviction in your solution delivering value and resonating alongside maybe even the final factor of the industry not being able to lean in the price and the lever of kind of claims efficiency and supporting profitability. Maybe all 3 kind of coming together as one, but would love your take there as well.

Sure, Dylan. Thank you. I would say, first and foremost, as you know, we have been working on building our AI capabilities for well over a decade. And what this has done is allowed us to really deeply build highly accurate models, which are only possible when you have $2 trillion of historical data. And the other thing, as you know, our customers -- the customers that we've announced today are some of the largest and the most sophisticated customers in the world, and they are the largest buyers of technology in the world. And so in other words, they've also had access to all of the LLMs and all of the tools. And what they are seeing is that over the last few years, they've also worked very closely with us in seeing the accuracy, the performance and specifically the ROI of our solutions. And the differentiation we have is that not only are these highly accurate AI solutions, but they're deeply embedded into the existing workflows where literally thousands of decisions are made by thousands of people, and then those workflows extend across the network. So this combination of world-class AI that works with very sophisticated data and also think about the feedback loop, right? On a daily basis, we're able to manage drift and the accuracy based on the feedback that we get on a real-time basis as we touch 20 million cars a year. And then connecting that into embedded workflows in a very regulatory -- regulated environment. And also, a lot of this has to be hyperlocal decisions. That means a national average number or a solution is not going to work. It's got to be very specific to ZIP codes and geography. So I would say the combination of all of these things has helped. But the single most important thing I would say is after 2, 3 years, in some instances, of work, after people have tested, evaluated and then made the decisions to go forward on a multiyear basis. So I would say that is the single most important thing is the testing, the evaluations. It has taken a little longer than we thought, but that's why we saw the momentum in Q4, and then we saw increased momentum in Q1.

That's very helpful. And then maybe, Brian, one for you, too. I think you kind of called it out at the end, but it's very clear that momentum, to Githesh's point, is resonating. On the casualty side, I know we saw some kind of true-ups in the first quarter, but I think you also called out a first-party 1-point headwind throughout the balance of the year. So maybe the core slightly being masked by that. But can you kind of dive into the segmentation between kind of third-party, first party, maybe a little bit of kind of the puts and takes there as well?

Yes. We haven't broken out the -- from a revenue mix perspective, third-party and first party. I think as Githesh has highlighted, we've talked about third party where we put a lot of investment in. We're seeing a lot of momentum, not only the Allstate win that we had in the quarter. Last time, we talked about Liberty Mutual coming on board. So we're seeing really good momentum. We continue to invest in first-party as well and feel good about that product position. So yes, we're feeling really good overall on the momentum we're seeing in casualty and the growth, not only in the quarter, but how it's setting up for the balance of the year and going forward from there.

Very helpful. Congrats, Brian.

Appreciate it.

Our next question comes from Tyler Radke with Citi.

Brian. It's been a pleasure working with you. Best of luck going forward. I wanted to just dive in a little bit on some of the true-ups dynamics that you saw in Q1, and I appreciate the clarification on the financial impact. But can you just remind us like the sort of contracting dynamics that drive that? Was it sort of outsized renewals? And did customers kind of undercommit on volumes or products that drove that? And just help us understand if there's anything to read through in terms of folks signing up and expanding post that true-up event?

Yes. Thanks for the kind words, Tyler, as well. So just as a reminder, 85% of our revenue is subscription, so largely subscription-based. In some of our subscriptions, and again, they will vary the deals. But in some subscriptions, they will commit to a certain level of volume. And if they trip that level of volume, we will true them up and take that true-up in the period. And so what we saw in the dynamic that played through in Q1 is they exceeded the minimum of the contract. They had some additional volumes and we trued that up. That doesn't necessarily mean it's a new contract as they go into the next part of their year or they go to the next year, that level of commitment will reset. So we highlighted the phasing and the impact in the quarter because it played through the 12%, but it is kind of a natural point of how the deals are structured. And as I said, this is kind of a specific deal. We have other flavors of subscription deals, but this one led to the true-up in the quarter.

Got it. And Githesh, I believe you talked about a pretty large top 5 insurer renewal that took a step-up kind of adding -- I don't know if it was a full suite of AI, but it sounds like they took on a lot of the AI capabilities. Can you just talk about sort of what that did to that contract in terms of the expansion? And is that something that you think you can replicate as you look across your other major renewals coming up?

Yes. The short answer to the last part of your question is we absolutely believe we will see this going forward, this approach. Again, as a reminder, this customer not only renewed all of our core suite, which is all our traditional core products, but they've also been deeply testing over the last couple of years in all our different AI solutions. And what was really unique about this was that they felt that getting an enterprise license across the board for a full suite of AI that then sits in addition to the core was really important because there was an ROI for the core solutions, and there was an incremental significant additional ROI for the AI solutions. And both of these work really well together. And that's what they saw and tested. And we believe this is an indication of how we are starting to see customers move forward. And then...

Yes. Just to build on, Githesh, your comments there that this -- what we're seeing across the organizations, our customers is that they are trying to adopt AI as quickly as possible in lots of different venues. And as Githesh alluded to, they have been working closely with us for years to help develop and test these solutions. And so we are certainly optimistic that the enthusiasm we're seeing in this particular case that you highlighted will continue across because we've been working with many of our customers in a similar kind of manner.

And sorry, just to clarify, like can you frame just what type of expansion that drove in the APD as they adopted the AI solutions?

Yes, Tyler, it's back to Brian. We don't talk about specific deal dynamics, but we have said in the past as a rule of thumb to think about our AI solutions within APD that it would add on about 50% of what they're paying us incrementally for the core software. So think about it as a 50% uplift on pricing.

Our next question comes from Kirk Materne with Evercore ISI.

I was wondering, actually, if I could just build on that last question from Tyler. Tim, in your comments, I'm sure every single one of your customers is getting inundated by new call -- phone calls from AI native companies and maybe the large labs. Has any of just the groundswell of interest in AI slowed any of the pilots down? Or are they getting distracted at all? Or do you feel like things are moving ahead at a cadence? I mean, it seems like at least in that case, it is. But I was just kind of curious on a more holistic basis, if any of just sort of the AI noise and frankly, the progression of the labs has sort of slowed things down or helped. I would just love just a broader view on that, too.

Yes, Kirk, thanks so much for the question. And what we're seeing is that customers are, in fact, the news about AI, the AI native companies, all of that sort of thing is just creating lots and lots of questions and enthusiasm and interest, as you alluded to, right? So that's what's happening in the market. What we have, and I just want to go back to something Githesh hit on, we have years of relationships and trust built up with these folks. So while everybody is interested in new innovations, you also want new innovations from someone that you've worked with for decades that is deeply embedded in your workflow, has helped you achieve all of your regulatory and compliance requirements. That really -- that years of credibility really helps us in this. So the fact that we have terrific AI solutions, coupled with a long period of working closely with these carriers, building enormous trust, that positions us really, really well. I hope that's helpful, Kirk.

That is. And then just, Brian, maybe on the -- one for you. Just on the new casualty wins, when you guys announced sort of a new win with some of these bigger carriers, what's the phasing of sort of bringing on or starting the revenue? I assume these projects take a little while to get ramped up. So how should we think about sort of an announcement relative to when that announcement or win starts to impact you guys from a top line perspective?

Yes. No, it's a really good point, and you picked it up right. I mean this will phase in as we go through the year. So once we sign it and close it, it doesn't just turn into run rate out of the gate. It will -- they'll transition into it and they'll build up on volume as well. So it will build as we go through the year and get to full run rate kind of in the second half of the year.

And Brian, congrats on the new endeavor.

Yes, Kirk. Thanks. It's been great working with you.

Our next question comes from Josh Baer with Morgan Stanley.

And Brian, congrats on the opportunity. I wanted to ask one on the pricing model and sort of this idea of it tied to value that you deliver. I mean, with increasing complexity, higher cost of claims, you're in a position to provide more value to your customers. So I'm wondering how this plays out in reality? Like how do you capture the value? Is it -- are we talking about your ability to sell new products and monetize additional products? Or is it even like in the time of a contract renewal that you can actually renegotiate pricing and capture pricing at renewal, if you could walk through how that plays out?

Josh, let me just start out with structurally how to think about the business, and then Brian will actually go into the math a little bit more. So when you look at it on a structural basis, over the years, we have an auto physical damage suite. We keep adding enhancements, functionality to the auto physical damage suite. So that has an ongoing ROI that people are managing, renewing. Then on top of that, there is a full layer of AI solutions that range from the front end of the claim where we are starting with our photo AI capabilities and along all the way through different steps in the claims process. That's true both for the insurance market. It's also true for the repair market, where we have a broad suite of AI solutions that go across on top of the core. That has its own ROI, which is incremental to the core, and that is another structural component. Then independent of that, we have solutions like subrogation, which apply even more broadly, and those are new products and completely separate from auto fiscal damage and the AI on top. And then casualty is yet another component. So does that structurally -- and same thing on the automotive side as we add solutions like Diagnostics, Build Sheets and others, those go into additional packages. So that's how to think about it on a structural basis. And then, Brian, if you want to add.

Yes. The only thing incrementally I'd add to what Githesh said is you're right, we sell on ROI. Typically, we think about a 5:1 ROI, and that's kind of how the products are priced. Your question on does that happen through new solutions being embedded into the bundle, it absolutely does. So as we bring new solutions out, prove the ROI with those new solutions, we're selling them on an ROI basis. Your other part of the question, does it allow opportunities through renewals? It can as well. We provide a tremendous amount of value as clients scale and roll out our software, the AI, but also our core solutions. So it does allow opportunities through renewal depending on where that client is priced at to have price impact through renewals.

Our next question comes from Adam Hotchkiss with Goldman Sachs.

Githesh, you've alluded quite a bit to the evaluation customers do ahead of taking on the emerging solutions. And I'm sure you've learned a lot based on the path by which some of these deals have converted recently. How should we think about from a magnitude perspective, what portion of your base are testing with high intent today, especially across AI? Is that the entire base? Or is that segmented to a certain portion of your base? Any color there would be helpful.

Sure. So first, I would start off with that our most complex and our largest and most sophisticated customers, they have a lot of edge cases, right? They're operating in every jurisdiction, every area, and they have a lot of edge cases. So there's a lot more complexity. And so there is a fair amount of testing. And the beauty for us is that we benefit from having just amazing customers who have this level of complexity, and it allows us to really tune, hone, get all the edge cases right, get the AI right, get all the nuances, the drift, the accuracy, all of that right. And this is also -- and I know I've had the benefit of seeing this over the last 2, 3 decades that once these solutions are truly working at that scale, then for the entire industry, this becomes easier and easier and easier to adopt and scale. And so that is really how this thing really starts to move through. And we've learned an awful lot in this process. But the references we get are phenomenal out of this. And Tim, if you want to add to this?

Yes. I just would build on Githesh, what you said, which is we really do work very intensively, as Githesh alluded to, with those largest clients. And what we're now seeing is that because the solutions are well tested in many different places, we're seeing a rapid interest in lots of discussions about these across the board from a whole range of clients. And so while you can never exactly predict how fast adoption will occur, we're certainly seeing a very wide range of discussions because of the long testing that we've been doing with these products.

Okay. Great. That's really helpful. And then, Brian, echoing well wishes to you going forward. I think you mentioned emerging solutions generated 4 points of growth. How did that contribution come in versus your expectations? I think the beat was a bit of a surprise in the quarter, and I understand there's some onetime dynamics, but even backing those out, it does feel like things were better than you had expected. How should we think about that 4% through the rest of the year and going forward?

Yes. Thanks, Adam, for the kind words. Yes, we were really happy in the quarter overall. We're happy with the 12% growth. We are happy with the beat. Emerging delivered 4 points of growth, and we're seeing a lot of momentum as we've been highlighting in the call. About 1 point in the emerging solutions was the impact of EvolutionIQ. So that was in there. We continue to see emerging as a category as one of our biggest areas of growth opportunities. So we do continue to expect that to grow in line and potentially have further opportunities as we go forward, both in this year and over the long term. So we're feeling really good on the momentum as we talked about the AI solutions and the pace that they're growing as well.

[Operator Instructions] Our next question comes from Alexei Gogolev with JPMorgan.

Githesh, if I may ask about the recent strong appointments that you made to Chief Product Officer. If you think about some of the road map targets that Josh will focus on, can you maybe talk about those? Is it going to be helping customers deploy more AI at scale or more like expanding into adjacent markets of casualty?

Yes. Let's say, first and foremost, we're really excited to have Josh on board. He has come up to speed very quickly, which is fantastic. And so we are really looking at the work we're doing in really 2 dimensions. So dimension #1 is that as we've AI-enabled every part of our product segment, like all the different flows within our insurance solutions, the solutions that we deliver to repair facilities to parts providers, OEMs. So there's a deepening of the product suite and additional components of the area that we can address. So that is one area. And that's -- and in that same -- think of that as a 1A, a 1B would be the additional expansions like a subrogation, and there are several other products and things that are in the road map that we'll be sharing with our customers at the upcoming NX customer conference. The second dimension, which is extraordinarily important that we are focused on and Josh, in particular, is focused on, is that we have an incredibly unique ecosystem of customers where the decisions and information flowing out of insurance going into a repair facility, going into a parts provider, going to a tower, going to a salvage yard, the ability to connect IX Cloud and the AI capabilities with an event management framework that goes across all of these things where the AI really drives the decision engines across all of the ecosystem. Our customers are coming back and telling us that is like -- that is super exciting. And so those are the 2 dimensions in which we are very focused.

Brian, thank you very much for all the years. I appreciate and I enjoyed working with you. If I may ask a quick question about international demand. Very often in vertical SaaS, we see international expansion being driven by customers themselves. Is this something that you're seeing among your clients? How does that inform your international expansion appetite maybe in Europe?

Yes. I'll take the first part of that, and then I will have Tim jump in for the second part because, as you know, Tim has served this industry on a global basis for many decades. And so I would say, first and foremost, we're seeing tremendous opportunity in terms of the TAM expansion that we have seen. So the TAM expansion in our core, our AI solutions, solutions like subrogation, casualty, disability, workers' comp, where -- even in workers' compensation through the acquisition of EIQ, we've landed some of the largest private employers in the country for some of the EIQ solutions. So we are not seeing any shortage of opportunity across the country, and many of our customers tend to be here. But the opportunity internationally is substantial, and we will get to it at some point. And Tim, maybe you could share some perspective. Tim has a global perspective.

A couple of thoughts on this. First, I would just highlight, Githesh, or underscore what you just said, which is there's enormous TAM expansion in the U.S. So that's a huge opportunity. And second, Alexei, as you're aware, many are -- many of the companies we serve, the insurers and the repair facilities are primarily U.S. companies. They may have small operations outside the U.S., but that is primarily our U.S. companies. And so as we think about international, it would be thinking about what is the TAM and then where would be companies that may be interested in our solutions, but don't necessarily have a domestic U.S. presence just given that that's the nature of the industry. So you want to think about the industry structure as well as the total TAM. I hope that helps a little bit.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Githesh for any further remarks.

Well, thanks, everybody, and really appreciate the thoughtful questions. I would say that we are truly encouraged by the strong operating momentum across the business, and we saw this first at the end of 2025. And what we're really excited about is that this momentum continues to carry into the first quarter of 2026 and beyond. And as complexity continues to increase in the insurance economy, we are truly, truly grateful that our customers are truly turning to CCC to manage mission-critical workflows, apply AI that are trusted and scalable. And we think our unique data, the embedded workflows we have, the depth and breadth of our network really positions us well to support our customers and continue -- and we believe that will translate into sustained growth at some of the largest insurers, repairs and other parts of our customer base. And we're excited to deepen those relationships. And again, very focused on very disciplined execution. And I'd like to take this opportunity to thank our employees, our customers and our shareholders for the deep trust everybody places in us. And we'll wrap up by saying a huge thank you, Brian, to you for all the years and the amazing partner that you've been.

Thanks, Githesh. It's been a true pleasure.

Thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.