CCC Intelligent Solutions Holdings Inc
For the period ended Jun 30, 2024. Filed Jul 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 30, 2024
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-30.
0000950170-24-050638
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0000950170-24-088015
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 101 previous paragraphs and 140 current paragraphs.
62 unchanged; 33 reworded; 39 added; 5 removed; 1 previous and 6 current paragraphs rearranged.
Tables are not compared: 10 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
Cost of revenues decreased by $3.8 million to $55.3 million, or 6.4%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.
Current report
Cost of Revenues, exclusive of amortization and impairment of acquired technologies
Current report
Amortization of acquired technologies decreased $4.6 million, or 68.6%, to $2.1 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease was due to certain acquired technology intangible assets reaching the end of their useful life during the three months ended June 30, 2024.
Current report
Impairment of Acquired Technologies
Current report
There was no impairment of acquired technologies recognized during the three months ended June 30, 2024. Impairment of acquired technologies was $0.4 million for the three months ended June 30, 2023 due to an impairment charge recognized as a result of a downward revision of projected earnings and cash flows of our China reporting unit.
Current report
Research and development expense increased by $5.9 million to $49.3 million, or 13.6%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily due to a $4.9 million increase in stock-based compensation and a $1.8 million increase in IT related costs, partially offset by a $0.8 million decrease in personnel and resource costs.
Current report
Selling and marketing expense increased by $0.4 million to $36.3 million, or 1.1%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was due to a $0.4 million increase in marketing related costs.
Current report
General and administrative expense increased by $5.1 million to $51.3 million, or 11.1%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily due to a $2.5 million increase in personnel-related costs, including a $1.3 million increase in stock-based compensation, a $1.6 million increase in professional service costs, and a $1.0 million increase in IT related costs.
Current report
Impairment of Goodwill and Intangible Assets
Current report
There was no impairment charge recognized during the three months ended June 30, 2024. We recorded impairment charges of goodwill and intangible assets of $77.4 million and $4.9 million, respectively, for the three months ended June 30, 2023. The impairment charges were the result of lower forecasted earnings and cash flows for the Company’s China reporting unit.
Current report
Other Income—Net
Current report
Income Tax (Provision) Benefit
Current report
Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023
Current report
Revenues
Current report
Revenues increased by $43.2 million to $459.9 million, or 10.4%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The Company's software subscription revenues accounted for $441.1 million and $399.1 million, or 96% of total revenue during the six months ended June 30, 2024 and 2023.
Current report
Cost of Revenues
Current report
Cost of revenues decreased by $1.6 million to $114.7 million, or 1.3%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.
Current report
Cost of Revenues, exclusive of amortization and impairment of acquired technologies
Current report
Cost of revenues, exclusive of amortization and impairment of acquired technologies, increased by $3.5 million to $106.0 million, or 3.5%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily due to a $2.9 million increase in third party fees and direct costs associated with our revenue growth, a $1.4 million increase in depreciation expense related to additional investments in platform and customer solution enhancements, and a $0.8 million increase in personnel-related costs, including stock-based compensation, partially offset by a $1.9 million decrease in IT related costs.
Current report
Amortization of Acquired Technologies
Current report
Amortization of acquired technologies decreased by $4.7 million, or 35.1%, to $8.7 million for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The decrease was due to certain acquired technology intangible assets reaching the end of their useful life during the six months ended June 30, 2024.
Current report
Impairment of Acquired Technologies
Current report
There was no impairment charge recognized during the six months ended June 30, 2024. Impairment of acquired technologies was $0.4 million for the six months ended June 30, 2023 due to an impairment charge recognized as a result of a downward revision of projected earnings and cash flows of our China reporting unit.
Current report
Gross Profit
Current report
Research and Development
Current report
Selling and Marketing
Current report
General and Administrative
Current report
General and administrative expense increased by $20.3 million to $108.3 million, or 23.1%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily due to a $16.9 million increase in personnel-related costs, including a $13.2 million increase in stock-based compensation, a $2.2 million increase in IT related costs and a $1.3 million increase in professional service costs.
Current report
Amortization of Intangible Assets
Current report
Amortization of intangible assets was $35.9 million and $36.1 million for the six months ended June 30, 2024 and 2023, respectively.
Current report
Impairment of Goodwill and Intangible Assets
Current report
There was no impairment charge recognized during the six months ended June 30, 2024. We recorded impairment charges of goodwill and intangible assets of $77.4 million and $4.9 million, respectively, for the six months ended June 30, 2023. The impairment charges were the result of lower forecasted earnings and cash flows for the Company’s China reporting unit.
Current report
Interest Expense
Current report
Interest expense increased by $5.2 million to $33.1 million, or 18.7%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily due to higher variable interest rates during the six months ended June 30, 2024.
Current report
Interest Income
Current report
We recognized income of $14.4 million from a change in fair value of warrant liabilities for the six months ended June 30, 2024, compared to expense of $19.2 million for the six months ended June 30, 2023. The change in fair value of warrant liabilities was primarily due to changes in the price of the Company's common stock during each respective period. During the six months ended June 30, 2024, the Company redeemed the outstanding warrants and as of June 30, 2024, no warrants remain outstanding.
Current report
Other Income—Net
Current report
Income Tax (Provision) Benefit
Current report
The Company recognized an income tax provision of $0.1 million and an income tax benefit of $3.1 million for the six months ended June 30, 2024 and 2023, respectively. The income tax provision during the six months ended June 30, 2024 was due to the tax provision related to pre-tax book income, primarily offset by the tax benefit related to stock-based compensation.
Removed paragraphs (5)
Previous report
Cost of revenues increased by $2.2 million to $59.4 million, or 3.9%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.
Previous report
Amortization of acquired technologies was $6.6 million and $6.7 million for the three months ended March 31, 2024 and 2023, respectively.
Previous report
General and administrative expense increased by $15.2 million to $57.1 million, or 36.3%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily due to a $14.4 million increase in personnel-related costs, including an $11.9 million increase in stock-based compensation, and a $1.1 million increase in IT related costs.
Previous report
Other Income (Expense)—Net
Previous report
Income Tax Benefit
Reworded paragraphs (33)
Previous wording
We believe we have become a leading insurance and repair SaaS 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 smart, dynamic experiences for their own customers. Our software integrates seamlessly with both legacy and modern systems alike 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 29,500 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 shop customers and a source of material efficiencies for our insurance carrier customers.
Current wording
We believe we have become a leading insurance and repair SaaS 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 smart, dynamic experiences for their own customers. Our software integrates seamlessly with both legacy and modern systems alike 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 30,000 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 shop customers and a source of material efficiencies for our insurance carrier customers.
Previous wording
We have processed more than $1 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 increase automation across 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 100 U.S. auto insurers and more than 1,000 U.S. collision repairers actively using AI-powered solutions in production environments.
Current wording
We have processed more than $1 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 increase automation across 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 100 U.S. auto insurers and more than 8,000 U.S. collision repairers actively using AI-powered solutions in production environments.
Previous wording
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 27 of the top 30 automotive insurance carriers in the U.S., based on Direct Written Premiums DWP, and hundreds of regional carriers. We have more than 35,000 total customers, including more than 29,500 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), more than 5,000 parts suppliers, 13 of the top 15 automotive manufacturers based on new vehicle sales, and numerous other companies that participate in the P&C insurance economy.
Current wording
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 27 of the top 30 automotive insurance carriers in the U.S., based on DWP, and hundreds of regional carriers. We have more than 35,000 total customers, including more than 30,000 automotive collision repair facilities (including repairers and other entities that estimate damaged vehicles), more than 5,500 parts suppliers, 13 of the top 15 automotive manufacturers based on new vehicle sales, and numerous other companies that participate in the P&C insurance economy.
Previous wording
Revenues increased by $22.3 million to $227.2 million, or 10.9%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The Company's software subscription revenues accounted for $218.1 million and $196.3 million, or 96% of total revenue during the three months ended March 31, 2024 and 2023.
Current wording
Revenues increased by $20.9 million to $232.6 million, or 9.9%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The Company's software subscription revenues accounted for $223.0 million and $202.9 million, or 96% of total revenue during the three months ended June 30, 2024 and 2023.
Previous wording
The increase in revenue was primarily a result of 8% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.
Current wording
The increase in revenue was primarily a result of 7% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.
Previous wording
Cost of revenues, exclusive of amortization of acquired technologies, increased by $2.4 million to $52.8 million, or 4.7%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily due to a $1.5 million increase in third party fees and direct costs associated with our revenue growth, and a $1.1 million increase in personnel-related costs, including stock-based compensation.
Current wording
Cost of revenues, exclusive of amortization and impairment of acquired technologies, increased by $1.2 million to $53.2 million, or 2.3%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily due to a $1.4 million increase in third party fees and direct costs associated with our revenue growth and a $0.8 million increase in depreciation expense related to additional investments in platform and customer solution enhancements, partially offset by a $1.1 million decrease in information technology ("IT") related costs.
Previous wording
Gross profit increased by $20.1 million to $167.9 million, or 13.6%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Our gross profit margin was 73.9% for the three months ended March 31, 2024, compared to 72.1% for the three months ended March 31, 2023. The increase in gross profit and gross profit margin was due to increased software subscription revenues and economies of scale resulting from fixed cost arrangements.
Current wording
Gross profit increased by $24.7 million to $177.3 million, or 16.2%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. Our gross profit margin was 76.2% for the three months ended June 30, 2024, compared to 72.1% for the three months ended June 30, 2023. The increase in gross profit and gross profit margin was due to increased software subscription revenues, economies of scale resulting from fixed cost arrangements and lower amortization of acquired technologies.
Previous wording
Amortization of intangible assets was $17.9 million and $18.1 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Amortization of intangible assets was $17.9 million and $18.0 million for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
Interest expense increased by $2.6 million to $16.5 million, or 18.9%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily due to higher variable interest rates during the three months ended March 31, 2024.
Current wording
Interest expense increased by $2.6 million to $16.6 million, or 18.5%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily due to higher variable interest rates during the three months ended June 30, 2024.
Previous wording
Interest income decreased by $0.8 million to $2.5 million, or 24.3%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due to lower average balances on interest earning deposits and money market funds during the three months ended March 31, 2024.
Current wording
Interest income decreased by $1.4 million to $2.6 million, or 34.8%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, due to lower average balances on interest earning deposits and money market funds during the three months ended June 30, 2024.
Previous wording
We recognized expense of $1.6 million from a change in fair value of warrant liabilities for the three months ended March 31, 2024, compared to income of $1.2 million for the three months ended March 31, 2023. The change in fair value of warrant liabilities was primarily due to changes in the price of the Company's common stock during each respective period.
Current wording
We recognized income of $16.0 million from a change in fair value of warrant liabilities for the three months ended June 30, 2024, compared to expense of $20.4 million for the three months ended June 30, 2023. The change in fair value of warrant liabilities was primarily due to changes in the price of the Company's common stock during each respective period. During the three months ended June 30, 2024, the Company redeemed the outstanding warrants and as of June 30, 2024, no warrants remain outstanding.
Previous wording
We recognized other income—net of $2.9 million for the three months ended March 31, 2024 compared to other expense—net of $2.6 million for the three months ended March 31, 2023. The change was primarily due to the change in fair value of the interest rate cap derivative instruments during each period, driven by changes in the forward yield curves and time to maturity, and the income recognized from the interest rate cap derivative instruments during the three months ended March 31, 2024.
Current wording
We recognized other income—net of $1.3 million for the three months ended June 30, 2024 compared to other income—net of $3.9 million for the three months ended June 30, 2023. The change was primarily due to the change in fair value of the interest rate cap derivative instruments during each period, driven by changes in the forward yield curves and time to maturity, and the income recognized from the interest rate cap derivative instruments during the three months ended June 30, 2024.
Previous wording
The Company recognized an income tax benefit of $4.2 million and $0.8 million for the three months ended March 31, 2024 and 2023, respectively. The income tax benefit during the three months ended March 31, 2024 was due to the tax benefit related to stock-based compensation.
Current wording
The Company recognized an income tax provision of $4.3 million and an income tax benefit of $2.3 million for the three months ended June 30, 2024 and 2023, respectively. The income tax provision during the three months ended June 30, 2024 was due to the tax provision related to pre-tax book income.
Previous wording
Research and development expense increased by $8.5 million to $49.5 million, or 20.7%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily due to a $6.5 million increase in personnel-related costs, including a $5.2 million increase in stock-based compensation, and a $3.3 million increase in IT related costs, partially offset by a $0.8 million increase in the amount of capitalized time on platform and customer solution enhancements and a $0.8 million decrease in consulting costs.
Current wording
Research and development expense increased by $14.4 million to $98.7 million, or 17.0%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily due to an $11.2 million increase in personnel-related costs, including a $10.1 million increase in stock-based compensation, and a $5.1 million increase in IT related costs, partially offset by a $1.0 million decrease in consulting costs and a $0.6 million increase in the amount of capitalized time on platform and customer solution enhancements.
Previous wording
Selling and marketing expense increased by $2.1 million to $35.6 million, or 6.1%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily due to a $2.3 million increase in personnel-related costs, including sales incentives, a $0.4 million increase in event costs, a $0.3 million increase in travel costs, and a $0.3 million increase in consulting costs, partially offset by a $1.5 million decrease in stock-based compensation.
Current wording
Selling and marketing expense increased by $2.4 million to $71.9 million, or 3.5%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily due to a $4.2 million increase in personnel-related costs, including sales incentives and travel costs, a $0.9 million increase in marketing and event related expenses, and a $0.3 million increase in consulting costs, partially offset by a $3.5 million decrease in stock-based compensation.
Previous wording
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 and stock-based compensation and related employer payroll tax, which are not indicative of our recurring core business operating results. Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by Revenue.
Current wording
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, impairment of acquired technologies, and stock-based compensation and related employer payroll tax, which are not indicative of our recurring core business operating results. Adjusted Gross Profit Margin is defined as Adjusted Gross Profit divided by Revenue.
Previous wording
The following table reconciles Gross Profit to Adjusted Gross Profit for the three months ended March 31, 2024 and 2023:
Current wording
The following table reconciles Gross Profit to Adjusted Gross Profit for the three and six months ended June 30, 2024 and 2023:
Previous wording
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, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential mergers and acquisitions ("M&A") and costs related to equity transactions, including secondary offerings.
Current wording
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, impairment of goodwill, impairment of intangible assets, stock-based compensation expense and related employer payroll tax, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential mergers and acquisitions ("M&A") and costs related to equity transactions, including secondary offerings.
Previous wording
The following table reconciles operating expenses to Adjusted Operating Expenses for the three months ended March 31, 2024 and 2023:
Current wording
The following table reconciles operating expenses to Adjusted Operating Expenses for the three and six months ended June 30, 2024 and 2023:
Previous wording
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 adjusted for amortization of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings.
Current wording
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, impairment of goodwill, impairment of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings.
Previous wording
The following table reconciles operating income to Adjusted Operating Income for the three months ended March 31, 2024 and 2023:
Current wording
The following table reconciles operating income (loss) to Adjusted Operating Income for the three and six months ended June 30, 2024 and 2023:
Previous wording
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 (loss) income adjusted for interest, taxes, amortization of intangible assets and acquired technologies, depreciation, stock-based compensation expense and related employer payroll tax, change in fair value of warrant liabilities, change in fair value of derivative instruments, income from derivative instruments, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.
Current wording
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, impairment of goodwill, impairment of acquired technologies and intangible assets, change in fair value of warrant liabilities, change in fair value of derivative instruments, income from derivative instruments, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.
Previous wording
The following table reconciles net (loss) income to Adjusted EBITDA for the three months ended March 31, 2024 and 2023:
Current wording
The following table reconciles net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023:
Previous wording
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 (loss) income adjusted for the after-tax effects of amortization, stock-based compensation expense and related employer payroll tax, change in fair value of warrant liabilities, change in fair value of derivative instruments, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings.
Current wording
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, impairment of goodwill, impairment of intangible assets and acquired technologies, stock-based compensation expense and related employer payroll tax, change in fair value of warrant liabilities, change in fair value of derivative instruments, litigation costs for matters in which we are the plaintiff and related antitrust matters, costs associated with the acquisition and integration of completed and potential M&A and costs related to equity transactions, including secondary offerings.
Previous wording
The following table reconciles net (loss) income to Adjusted Net Income and Adjusted Earnings per Share for the three months ended March 31, 2024 and 2023:
Current wording
The following table reconciles net income (loss) to Adjusted Net Income and Adjusted Earnings per Share for the three and six months ended June 30, 2024 and 2023:
Previous wording
The following table reconciles net cash provided by operating activities to Free Cash Flow for the three months ended March 31, 2024 and 2023:
Current wording
The following table reconciles net cash provided by operating activities to Free Cash Flow for the three and six months ended June 30, 2024 and 2023:
Previous wording
We have financed our operations with cash flows from operations. The Company generated $55.2 million of cash flows from operating activities during the three months ended March 31, 2024. As of March 31, 2024, the Company had cash and cash equivalents of $191.2 million, a working capital surplus of $207.3 million and an accumulated deficit totaling $1,127.1 million. As of March 31, 2024, the Company had $782.0 million aggregate principal outstanding on its term loan.
Current wording
We have financed our operations with cash flows from operations. The Company generated $107.0 million of cash flows from operating activities during the six months ended June 30, 2024. As of June 30, 2024, the Company had cash and cash equivalents of $237.9 million, a working capital surplus of $262.3 million and an accumulated deficit totaling $1,105.6 million. As of June 30, 2024, the Company had $780.0 million aggregate principal outstanding on its term loan.
Previous wording
As of March 31, 2024, the amount outstanding on the Term B Loan was $782.0 million, of which, $8.0 million is classified as current.
Current wording
As of June 30, 2024, the amount outstanding on the Term B Loan was $780.0 million, of which, $8.0 million is classified as current.
Previous wording
During the three months ended March 31, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 6.9%, respectively.
Current wording
During the three months ended June 30, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 7.4%, respectively.
Previous wording
The following table provides a summary of cash flow data for the three months ended March 31, 2024 and 2023:
Current wording
The following table provides a summary of cash flow data for the six months ended June 30, 2024 and 2023:
Previous wording
Net cash provided by operating activities was $55.2 million for the three months ended March 31, 2024. Net cash provided by operating activities consists of net loss of $0.6 million, adjusted for $68.6 million of non-cash items, ($14.3) million for changes in working capital and $1.5 million for the effect of changes in other operating assets and liabilities. Significant non-cash adjustments include stock-based compensation expense of $45.0 million, depreciation and amortization of $34.0 million, deferred income tax benefits of $12.1 million and a change in fair value of warrant liabilities of $1.6 million. The change in working capital was primarily a result of a decrease in accrued expenses of $31.2 million due to timing of cash disbursements and employee incentive plan payments, partially offset by an increase in accounts payable of $7.4 million due to timing of payments to suppliers, a $7.2 million change in income taxes due to timing of payments and a $1.7 million increase in deferred revenue.
Current wording
Net cash provided by operating activities was $107.0 million for the six months ended June 30, 2024. Net cash provided by operating activities consists of net income of $20.8 million, adjusted for $111.2 million of non-cash items, ($25.7) million for changes in working capital and $0.6 million for the effect of changes in other operating assets and liabilities. Significant non-cash adjustments include stock-based compensation expense of $85.1 million and depreciation and amortization of $63.7 million, partially offset by deferred income taxes of $24.7 million, and a change in fair value of warrant liabilities of $14.4 million. The change in working capital was primarily a result of an increase in accounts receivable of $18.6 million due to timing of payments, a decrease in accrued expenses of $12.7 million due to timing of cash disbursements and employee incentive plan payments, and a change in income taxes of $5.8 million, partially offset by a decrease in other current assets of $5.9 million and an increase in accounts payable of $4.6 million due to timing of payments to suppliers.
Previous wording
Net cash used in investing activities was $15.7 million for the three months ended March 31, 2024. Net cash used in investing activities was due to capitalized internally developed software projects and purchases of software, equipment, and property.
Current wording
Net cash used in investing activities was $31.2 million for the six months ended June 30, 2024. Net cash used in investing activities was due to capitalized internally developed software projects and purchases of software, equipment, and property.
Previous wording
Net cash used in financing activities was $43.8 million for the three months ended March 31, 2024. Net cash used in financing activities was due to $52.6 million payment of employee tax liabilities related to the net share settlement of employee equity awards and $2.0 million of principal payments of long-term debt, partially offset by $8.9 million of proceeds from stock option exercises and $1.8 million of proceeds from the issuance of stock under the employee stock purchase plan.
Current wording
Net cash used in financing activities was $33.3 million for the six months ended June 30, 2024. Net cash used in financing activities was due to $52.7 million payments for employee tax liabilities related to the net share settlement of employee equity awards and $4.0 million of principal payments of long-term debt, partially offset by $21.6 million of proceeds from stock option exercises and $1.8 million of proceeds from the issuance of stock under the employee stock purchase plan.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
The increase in revenue was primarily a result of 7% growth from existing customer upgrades and expanding solution offerings to these existing customers as well as 3% growth from new customers.
Current report — wording carried from elsewhere
Gross profit increased by $44.8 million to $345.2 million, or 14.9%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. Our gross profit margin was 75.1% for the six months ended June 30, 2024, compared to 72.1% for the six months ended June 30, 2023. The increase in gross profit and gross profit margin was due to increased software subscription revenues and economies of scale resulting from fixed cost arrangements.
Current report — wording carried from elsewhere
Interest income decreased by $2.2 million to $5.1 million, or 30.1%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, due to lower average balances on interest earning deposits and money market funds during the six months ended June 30, 2024.
Current report — wording carried from elsewhere
Change in Fair Value of Warrant Liabilities
Current report — wording carried from elsewhere
We recognized other income—net of $4.2 million for the six months ended June 30, 2024 compared to other income—net of $1.4 million for the six months ended June 30, 2023. The change was primarily due to the change in fair value of the interest rate cap derivative instruments during each period, driven by changes in the forward yield curves and time to maturity, and the income recognized from the interest rate cap derivative instruments during the six months ended June 30, 2024.
Current report — wording carried from elsewhere
During the six months ended June 30, 2024 and 2023, the weighted-average interest rate on the outstanding borrowings under the Term B Loan was 7.8% and 7.1%, respectively.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Cost of Revenues, exclusive of amortization of acquired technologies