Verisk Analytics, Inc. Q1 FY2025 earnings call

• Verisk had solid first quarter results with double-digit subscription growth, 7.9% OCC revenue growth, and 130 basis points of margin expansion.
• Industry backdrop: Insurance industry returned to profitability in 2024 but faces uncertain risk environment with factors like inflation, regulatory changes, etc.
• Insights: Core Lines Reimagine project converting data to insights, Executive Insights expanded, generative AI tool introduced.
• Connecting data sets: Enterprise Exposure Manager combines capabilities for global risk evaluation; Verisk Synergy Studio, a cloud-native catastrophe modeling platform, launching in 2026 with strong client interest.
• Efficient ecosystem: Growing ecosystem with new partners, Regulatory Data Exchange launched, acquisition of Simplitium to support risk transfer ecosystem.

For the first quarter, organic constant currency (OCC) revenues grew 7.9%. Subscription revenues, which comprised 83% of total revenue, grew 10.6% OCC. Subscription growth was broad-based across most business units, with strong price realization in renewals, expanded client relationships, and sales of new solutions. Forms, rules, and loss costs saw improved value capture through pricing. Anti-fraud had underlying strength with sales of new solutions. Extreme Event solutions had high single-digit subscription growth. Transactional revenues, making up 17% of total revenues, declined 4% OCC due to conversion of transactional to committed subscriptions and soft results in personal auto and some software-related businesses.

• Expect consolidated revenue for 2025 to be in the range of $3.03 billion to $3.08 billion.
• Adjusted EBITDA expected to be $1.67 billion to $1.72 billion.
• Adjusted EBITDA margin expected to be 55% to 55.8%.
• Tax rate expected to be in the range of 23% to 25%.
• Adjusted earnings per share expected to be $6.80 to $7.10.

• Uncertain risk environment including inflation, regulatory changes, rising reconstruction costs, social inflation, potential impact of tariffs and severe weather events.

Q: Toni Kaplan from Morgan Stanley asked about Marketing Solutions, specifically non-insurance business drag on transactional side and outlook.

A: Elizabeth Mann said marketing business has opportunity to access insurance carrier spend but exposed to other customer segments with headwinds, and potential macro slowdown could challenge balance of year.

Q: Kelsey Zhu from Autonomous Research asked about strong pricing realization in forms, rules, loss cost.

A: Elizabeth Mann said it's due to delivering value to clients, supported by strong premium environment, and Saurabh Khemka added about insights and automation tools providing value.

Q: Faiza Alwy from Deutsche Bank asked about margins and global talent optimization.

A: Elizabeth Mann said margin efficiency is embedded but trajectory may taper, and Lee Shavel added about balancing investment intensity with margins.

Q: Andrew Nicholas from William Blair asked about improved sales model to broader businesses.

A: Lee Shavel said it's about extending go-to-market learnings from large businesses to growth businesses like Life Insurance, SBS, and Marketing Solutions.

Q: Alex Kramm from UBS asked about uncertain environment and delays in decision-making.

A: Elizabeth Mann said Verisk doesn't have material direct exposure to tariffs, but monitoring impact on other industry segments.

Q: Andrew Steinerman from JPMorgan asked about D&A as percentage of revenues.

A: Elizabeth Mann said D&A is a result of CapEx, and Lee Shavel added about return on invested capital excluding D&A.

Q: Jeff Meuler from Baird asked about forms, rules, loss cost revenue growth and AI.

A: Elizabeth Mann said investments in Core Lines Reimagine are for long-term value and innovation, and Lee Shavel added about deeper integration of data sets into clients' processes.

Q: Gregory Peters from Raymond James asked about deploying solutions with legacy platforms.

A: Lee Shavel said industry is modernizing infrastructure with third-party vendors, and Verisk's role as a connector provides connectivity benefits.

Q: George Tong from Goldman Sachs asked about improved price realization.

A: Lee Shavel said it's from dialogue with clients on value creation, and it's a continuous journey to close the gap.

Q: David Motemaden from Evercore ISI asked about customers focusing on expenses.

A: Lee Shavel said customers are focused on efficiency, and 2024 had an underwriting gain with 96% combined ratio.

Q: David Paige from RBC Capital Markets asked about buyback cadence.

A: Elizabeth Mann said they follow capital allocation framework and prioritize organic investment, dividends, and buybacks when appropriate.

Q: Russell Quelch from Redburn Atlantic asked about transactional revenue decline and auto shopping sector.

A: Elizabeth Mann said transactional decline includes one contract conversion and contract conversions, and auto business has balanced results with attrition and carrier focus shift.

Q: Jason Haas from Wells Fargo asked about client conversation and economically sensitive segments.

A: Lee Shavel said no fundamental change in client priorities, and Elizabeth Mann added about monitoring macro impact on non-carrier segments.

Q: Brendan [ph] from Barclays asked about M&A opportunities.

A: Lee Shavel said they look for products adding value to insurance industry, like acquisition of Simplitium.

Q: Jeff Silber from BMO Capital Markets asked about weather impact on business.

A: Elizabeth Mann said wildfire has little impact, and Robert Newbold added about wildfire model engagement with California Department of Insurance