CCC — Q2 2026 Financial Report Analysis

Revenue up 9.8%, but most of the profit jump came from lower stock pay

CCC Intelligent Solutions sells cloud software that auto insurers, collision repair shops, automakers and parts suppliers use to handle a car insurance claim from first notice to finished repair. In the second quarter of 2026 (April to June) revenue rose 9.8% to $285.9 million, slightly above the company's own $283–285 million guidance. GAAP operating income almost doubled to $47.6 million. The main reason was not faster growth: stock-based compensation, meaning pay given to employees in shares instead of cash, fell by about a third. Adjusted EBITDA, the profit measure management prefers, grew 6.8%. That is slower than revenue, so on the company's own preferred yardstick, margins narrowed this quarter.

At a glance

• $285.9 million revenue, +9.8%. About 7 points came from existing customers buying more products and about 2 points from new customers, according to the 10-Q. Growth slowed from 12% in Q1.
• Net dollar retention steady at 107%, gross retention down to 98% from 99%. On average existing customers spend 7% more each year. The share of revenue lost to customers who leave ticked up a little.
• Free cash flow of $82.4 million, three times last year's $27.4 million. About half of the first-half improvement came from lower tax payments, not from the underlying business (details below).

The numbers

Note: GAAP EPS is reported rounded to the cent, so the +100% reflects a move from $0.02 to $0.04. The underlying net income rose 60.4%.

Where the growth came from

Almost all of CCC's revenue (96%) is software subscriptions, which repeat each year. The 10-Q attributes the quarter's growth to "approximately 7% growth from existing customer upgrades and expanding solution offerings to these existing customers and approximately 2% growth from new customers." That matches the two retention figures CCC tracks:

• Software NDR (net dollar retention) compares what this year's customers pay now with what the same customers paid a year ago, counting upgrades, price changes and downgrades. It was 107% in both Q1 and Q2, the same as a year earlier, and up from 105–106% in the second half of 2025.
• Software GDR (gross dollar retention) counts only revenue lost from customers who left entirely. It slipped to 98% in both 2026 quarters from 99% a year ago. A one-point change is small, but it is the only metric here that moved the wrong way, and it is worth watching.

In the earnings release, management pointed to adoption of its AI products: two of the top five US auto insurers expanded use of its AI claims-routing tool (which flags likely total losses early), another top-five insurer adopted its AI subrogation product (subrogation is the process of recovering claim costs from the at-fault party's insurer), and one of the largest multi-store repair chains renewed and expanded its contract. The filing does not give revenue figures for these products. Read them as evidence of where upsell is coming from, not as figures you can size.

Growth slowed from 12% in Q1 to 9.8% in Q2. The filing gives no single reason. Guidance for Q3 ($289.5–291.5 million) points to sequential growth of about 1–2% on Q2.

Margins: costs grew faster than revenue

Cost of revenues (excluding amortization of acquired technology) rose 14.3% to $70.9 million, faster than revenue. The 10-Q cites a $5.1 million increase in IT costs, $2.8 million more in personnel costs and $1.8 million in third-party fees tied to revenue growth. GAAP gross margin fell from 74.5% to 73.7%. On the company's adjusted basis it fell from 78% to 76%, a bigger drop, because the adjusted figure strips out stock pay and that add-back shrank.

Operating expenses moved the other way on paper. R&D fell 11.6% to $53.0 million, but the 10-Q explains this as "a $3.6 million increase in the amount of capitalized time" plus $2.6 million less stock pay. Capitalizing development time means recording it as an asset on the balance sheet and spreading the cost over future years, instead of expensing it now. The work is still being paid for, just not through this quarter's income statement. Capital spending on software and equipment rose to $19.1 million from $15.7 million. Excluding stock pay and amortization, adjusted operating expenses grew 6.9% to $115.7 million, slower than revenue but not by much.

What the headline numbers hide

• Most of the GAAP profit jump is lower stock pay. Stock-based compensation, including related payroll tax, fell to $30.5 million from $46.3 million, or from 17.8% of revenue to 10.7%. GAAP operating income rose $23.2 million. About $15.7 million of that, roughly two-thirds, is the drop in stock pay. Adjusted operating income, which excludes stock pay and acquisition amortization, rose only $7.3 million (+7.8%). The fall in stock pay is a real cost reduction for shareholders, because it means less dilution. But it isn't the same as the business getting more efficient.
• The adjusted-to-GAAP gap is still large. Adjusted EBITDA of $115.5 million compares with GAAP net income of $20.8 million. The biggest add-backs are stock pay ($30.5 million), interest ($19.6 million net), amortization of intangibles from past acquisitions ($22.9 million), depreciation ($13.9 million) and tax ($9.8 million). One-off items were small this quarter: M&A and integration costs of $0.5 million.
• A swap gain helped pre-tax income. "Other income" swung to +$2.6 million from -$2.1 million last year. The 10-Q attributes this to changes in the fair value of CCC's three interest-rate swaps, contracts that lock in the interest rate on its floating-rate debt. That is a paper gain with no operating cause, and the adjusted figures exclude it.
• Net income growth looks modest only because of last year's tax benefit. Pre-tax income rose more than fivefold to $30.6 million from $5.8 million. Net income rose only 60% because Q2 2025 recorded a $7.2 million tax benefit, while Q2 2026 had a $9.8 million tax charge.
• Buybacks did much of the work in adjusted EPS. Adjusted net income rose only 4.1% to $61.3 million, but adjusted diluted EPS rose to $0.10 from $0.09 because diluted shares fell 11.5% to 584.9 million. CCC bought back $300 million of stock through an accelerated repurchase in December 2025 (an "ASR", where a bank delivers most of the shares up front), paid for partly with a new $300 million term loan. It bought another $100 million (16.6 million shares) in March 2026. That debt is why interest expense rose 14.1% to $20.4 million. Fewer shares, paid for with more debt.
• Cash conversion is strong, but flattered by taxes. Operating cash flow was $101.6 million against $20.8 million of net income. Over the first half it was $159.0 million against $36.2 million. Most of the gap is non-cash stock pay and amortization, which is normal for this kind of company. But cash taxes paid in the first half were just $1.8 million versus $26.6 million a year earlier, and income taxes receivable fell from $33.3 million to $17.1 million as refunds came in. That is about $25 million of first-half free cash flow that won't repeat at the same scale. Excluding it, first-half free cash flow of $124.0 million would still be up, but closer to +40% than +75%.
• Receivables are under control. Accounts receivable rose 3% since December to $141.1 million, slower than revenue growth. Deferred revenue (cash billed in advance) dipped to $67.0 million from $72.8 million, a normal seasonal pattern for annual billing done early in the year.

Takeaway: CCC's underlying business grew at about 10% with steady customer expansion (107% NDR). The near-doubling in GAAP operating income comes mostly from a one-third cut in stock-based pay, not faster growth, and adjusted EBITDA margin actually slipped as cloud and IT costs rose faster than revenue. Per-share gains are being boosted by debt-funded buybacks. That works while the business keeps growing, but it leaves less room if it slows.

Debt and balance sheet

CCC ended June with $115.9 million in cash and $1.27 billion of total debt. Measured against the midpoint of full-year adjusted EBITDA guidance ($488 million), net debt is about 2.4 times one year's adjusted EBITDA (our calculation). That is manageable for a business with 98% gross retention, but it is higher than before the December term loan. $100 million remains available under the $500 million 2025 buyback program.

Outlook

Management slightly raised its full-year 2026 guidance on July 30:

Q2 came in above the top of its quarterly guidance on both revenue ($285.9 million vs. $283–285 million) and adjusted EBITDA ($115.5 million vs. $111–113 million). The full-year midpoints rose by only about $2 million and $1 million respectively, so the Q2 outperformance was barely passed through to the full year.

By our arithmetic, the guidance midpoints imply fourth-quarter revenue of about $303 million and adjusted EBITDA of about $133 million, a margin near 44%. That is well above Q2's 40.4%. So the full-year EBITDA target depends on margins improving in the back half, after a quarter in which cloud and IT costs pushed them down.

What to watch in Q3 (expected around late October): whether revenue lands in the $289.5–291.5 million range, whether adjusted EBITDA margin gets back above 41% as the guidance implies, whether gross dollar retention holds at 98% or slips further, and whether stock pay keeps falling as a share of revenue. Further cuts in stock pay are what would keep GAAP profit growth well ahead of revenue growth.

Source: CCC Intelligent Solutions Holdings Inc. Form 10-Q for the quarter ended June 30, 2026 (filed July 30, 2026), plus the Q2 2026 earnings release (Exhibit 99.1 to the Form 8-K of July 30, 2026) for non-GAAP reconciliations and guidance, and the Q1 2026 earnings release (April 30, 2026) for prior guidance.