Verisk Analytics Q2 2025 Earnings Report

Verisk Analytics EPS Results

• Actual EPS: $1.88
• Consensus EPS: $1.77
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $1.74

Verisk Analytics Revenue Results

• Actual Revenue: $772.60 million
• Expected Revenue: $767.91 million
• Beat/Miss: Beat by +$4.69 million
• YoY Revenue Growth: +7.80%

Verisk Analytics Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 8:30AM ET

Verisk Analytics (NASDAQ:VRSK) provides data analytics and technology solutions to the insurance markets in the United States and internationally. It offers policy language, prospective loss costs, policy writing and rating rules, and various underwriting solutions for risk selection and segmentation, pricing, and workflow optimization; property- and auto- specific rating and underwriting information solutions that allows clients to understand, quantify, underwrite, mitigate, and avoid potential loss for risks; catastrophe modeling solutions, which enables companies to identify, quantify, and plan for the financial consequences of catastrophes for use by insurers, reinsurers, intermediaries, financial institutions, and governments. The company also provides life insurance solutions for transforming current workflows in life insurance underwriting, claim insights, policy administration, unclaimed property/equity, compliance and fraud detection, and actuarial and portfolio modeling; Marketing Solutions, such as compliant, real-time decisioning, profitability, and risk assessment for inbound consumer interactions; and international underwriting and claims solutions. In addition, it offers claims insurance solutions, which provides analytics in fraud detection, compliance reporting, subrogation liability assessment, litigation, and repair cost estimation and valuation solutions; and casualty solutions, such as compliance, casualty claims decision support, and workflow automation solutions. Further, the company supplies software to the specialty insurance market. The company was founded in 1971 and is headquartered in Jersey City, New Jersey.

Verisk Analytics Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Verisk reported Q2 2025 organic constant currency revenue growth of 7.9% and organic constant currency adjusted EBITDA growth of 9.7%, driven by broad-based strength across underwriting and claims and continued cost discipline.
• Positive Sentiment: The company raised its full-year 2025 outlook to $3.09 billion–$3.13 billion in revenue, $1.70 billion–$1.74 billion in adjusted EBITDA, and $6.80–$7.00 in diluted adjusted EPS, reflecting strong H1 performance and M&A impact.
• Positive Sentiment: Verisk agreed to acquire AccuLinx for $2.35 billion and AssuranceBay, expecting combined revenue contributions of $40 million–$50 million this year and earnings accretion by late 2026.
• Positive Sentiment: The company rolled out new generative AI tools—Premium Audit Advisory Service AI, Mozart Compare with AI, and Underwriting Assistant—to speed up classification, forms management, and commercial underwriting processes.
• Negative Sentiment: GAAP net income fell 18% to $253 million and EPS dropped 16% to $1.81, driven by prior-year nonrecurring gains, while leverage will temporarily rise toward the top of the 2–3× target before planned deleveraging.

Presentation

[Operator]

Good day, everyone, and welcome to the Verisk Second Quarter twenty twenty five Earnings Results Conference Call. This call is being recorded. Currently, all participants are in a listen only mode. After today's prepared remarks, we will conduct a question and answer session where we will limit participants to one question so that we can allow time for everyone to ask a question. We will have further instructions for you at that time.

[Operator]

For opening remarks and introductions, I would like to turn the call over to Verisk's Head of Investor Relations, Ms. Stacy Broadbauer. Ms. Broadbauer, please go ahead.

[Stacey Brodbar, Head of Investor Relations & FP&A at Verisk Analytics]

Thank you, operator, and good day, everyone. We appreciate you joining us today for a discussion of our second quarter twenty twenty five financial results. On the call today are Lee Schabel, Verisk's President and Chief Executive Officer and Elizabeth Maff, Chief Financial Officer. The earnings release referenced on this call as well as our traditional quarterly earnings presentation and the associated 10 Q can be found in the Investors section of our website, verisk.com. The earnings release has also been attached to an eight ks that we have furnished to the SEC.

[Stacey Brodbar, Head of Investor Relations & FP&A at Verisk Analytics]

A replay of this call will be available for thirty days on our website and by dial in. As set forth in more detail in today's earnings release, I will remind everyone that today's call may include forward looking statements about Verisk's future performance, including those related to our financial guidance and our recently announced pending acquisition of Acculinks. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance is contained in our recent SEC filings. A reconciliation of reported and historic non GAAP financial measures discussed on this call is provided in our eight ks and today's earnings presentation posted on the Investors section of our website, verisk.com.

[Stacey Brodbar, Head of Investor Relations & FP&A at Verisk Analytics]

However, we are not able to provide a reconciliation of projected adjusted EBITDA and adjusted EBITDA margin to the most directly comparable expected GAAP results because of the unreasonable effort and high unpredictability of estimating certain items that are excluded from projected non GAAP adjusted EBITDA and adjusted EBITDA margin, including, for example, tax consequences, acquisition related costs, gains and losses from dispositions and other nonrecurring expenses, the effects of which may be significant. And now I'd like to turn the call over to Lee Schabel.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Thank you, Stacy. Good day, everyone, and welcome to today's call. I'm pleased to share that our operating momentum continued in the second quarter as we delivered another strong quarter, which was generally in line with our expectations. Organic constant currency revenue growth of 7.9 was broad based across most of our businesses. Our focus on cost discipline delivered healthy margin expansion, resulting in organic constant currency adjusted EBITDA growth of 9.7%.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Elizabeth will provide much more detail in her financial review, but these results demonstrate the compounding power of our subscription based business model driven by the value we create for our clients. I'm confident that this year is on track to be another solid year for Verisk, and we are raising our revenue and adjusted EBITDA outlook for the full year 2025 to reflect the strong first half and the impact of M and A. Almost three years ago, we unveiled the new Verisk, an insurance focused predictable growth company. We implemented structural and cultural changes to become more integrated, and we focused on elevating the strategic dialogue with our clients. The net result has been strong financial and operational growth.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

We also evolved our business from industry utility to data analytics specialist to integrated technology networks, serving the global insurance industry by focusing on innovation and advanced technologies. And we maintained our capital allocation discipline, investing behind our highest return on capital opportunities while returning excess capital to shareholders. This morning, we announced that we have signed a definitive agreement to acquire Acculinks for $2,350,000,000 Acculinks is the leading SaaS platform providing end to end business management workflow for the residential restoration and repair industry with expertise in roofing. AccuLinks is a natural fit and extension of the network capabilities we provide to insurance carriers and contractors through our property estimating solutions business. AccuLink's integrated service software platform sits at the center of the roofing contractors workflow, addressing each critical stage, including lead generation, sales and customer relationship management, virtual measurements, materials ordering, labor sourcing, payment processing and job management.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Most of the company's 5,000 plus customers perform insurance driven repairs and restoration and roofs are one of the largest and most expensive home components, making up more than 25% of all residential claim value. AccuLinx is a very strong business with a compelling financial profile marked by revenue growth and EBITDA margins that are accretive to Verisk overall and a high mix of recurring revenues. But more importantly, Acculinks is highly additive to our Property Estimating Solutions business due to a high degree of customer overlap and complementary functionality. We see strong incremental value creation from combining AccuLinx with Verisk property estimating solutions, which will in turn improve, extend and strengthen our network, enhancing the value of the ecosystem for all participants. Specifically, more seamless integration will remove manual work and improve information flow between carriers and contractors delivering cost and time savings for both constituencies, while property owners can benefit from quicker repairs due to workflow efficiency and cost savings driven by more accurate pricing data.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

On the data front, AccuLink's differentiated and rich datasets focused on roofing materials and labor will improve the analytics we provide to insurers and contractors. Through our elevated strategic dialogue, we hear frequent requests for enhancements to our roofing materials information and benchmarking reports. We see synergistic cross sell and upsell opportunities as we can advance the adoption of the AccuLinx platform and its many modules to existing Verisk customers. Additionally, we are excited about the opportunity for expanded data monetization of existing Verisk products across the AccuLinx client base. We previously announced the strategic acquisition of AssuranceBay, a leading provider of producer licensing, onboarding and compliance solutions for the life and annuity industry.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

InsuranceBay will become part of Verisk Life Solutions and extends our presence into the independent agent and broader distribution channel. The combination of InsuranceBay and Verisk's FAST business will help to streamline and improve the process of insurance distribution and will provide the life and annuity ecosystem with solutions that enhance workflows between carriers, general agencies, insurance agents and consumers. The initial reaction to the announcement has been very positive. Clients, prospects and industry analysts have commented that they see the value in an integrated solution as voiced by one of them that this was a perfect fit for the suite. This feedback further affirms our ongoing commitment to delivering innovative integrated solutions that address the evolving needs of the life and annuity sector.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Together, the acquisitions of AccuLink's Insurance Bay are a meaningful demonstration of our capital allocation discipline, which includes our fundamental value creating M and A philosophy. This approach is focused on three pillars, namely one, acquiring solid operating businesses consistent with our insurance focused strategy with sustainable growth and operating leverage two, identifying clear opportunities to improve and enhance the value of the combined entities and three, to acquire businesses at a price that generates an attractive return on capital. Over the past three years, we have demonstrated patience, selectivity and price discipline, and we are excited to welcome the AccuLink's insurance pay teams to Verisk. We are energized about working together to enhance the network effect of these businesses and maximize value for the property claims and life insurance ecosystems. Across Verisk, we have been focused on driving innovation and leaning in on our use of generative AI, embedding new features in some of our core products to deliver greater insights and efficiencies for our clients.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

In particular, as part of our Core Lines reimagine initiative, we launched Premium Audit Advisory Service AI, a first to market AI chatbot. This invention enables insurers to research classifications and rules to ensure risks are accurately classified at underwriting with information retrieval over 95% faster than our legacy solutions. Client adoption of the solution has been strong, and we are experiencing increases in time spent by clients as they are finding value in the tool. Additionally, within Mozart, our forms management platform, the Mozart Compare with AI enables our customers to compare across ISO forms to quickly identify changes we have made to coverage language to reflect up to date market and compliance requirements. This solution is saving our customers time and eliminating complexity in managing forms changes.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

And finally, we are in the early stages of a commercial introduction of Underwriting Assistant, our AI powered solution that produces transformative underwriting results with greater efficiency and data accuracy, enabling users to maximize their productivity and effectiveness. One of the key features of Underwriting Assistant is its ability to automate the creation of structured commercial property submissions, significantly reducing the time to decision, transforming what used to take days or weeks into just minutes. This not only speeds up the process, but also replaces lower value data capture activities, allowing underwriters who are leveraging the tool to focus on more strategic tasks. Our solution also enhances data accuracy through data augmentation by leveraging our extensive commercial property datasets to ensure that underwriters have the most reliable and complete data, contributing to more profitable underwriting decisions. And finally, our interactive chatbot provides real time expert advice to underwriters and agents, which leverages our deep domain expertise and proprietary data.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

By providing timely prompts and insights, we help ensure that underwriting decisions are both more informed and profitable. We are excited about this new groundbreaking innovation and the opportunity to help our insurance partners include the most advanced technologies in their core processes. Before we close, I want to announce that Maroon Murad is stepping down from his role at Verisk to assume an executive position at another public company. We wish Maroon well and thank him for his decade of service to Verisk. With Maroon's departure, Elizabeth Mann will take on the added responsibility of Interim President Claims Solutions.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

We are confident in the bench strength we have in place within claims and have commenced a search for a permanent replacement. Now let me turn the call over to Elizabeth for the financial review.

[Elizabeth Mann, CFO at Verisk Analytics]

Thanks, Lee, and good morning to everyone on the call. Today, I plan to provide details on three topics. First, I will cover our financial results for the second quarter twenty twenty five. Second, I will address the financial impact of our recently announced acquisitions of AssuranceBay and AccuLink. And third, I will provide details on our updated outlook for 2025.

[Elizabeth Mann, CFO at Verisk Analytics]

Turning to earnings. On a consolidated and GAAP basis, second quarter revenue was $773,000,000 up 7.8% versus the prior year, reflecting strong growth across both underwriting and claims. Net income was $253,000,000 an 18% decrease versus the prior year, while diluted GAAP earnings per share were $1.81 down 16% versus the prior year. The decline in GAAP net income and EPS are primarily the result of a cumulative $102,000,000 net gain in the prior year period related to previously disposed businesses and the early extinguishment of debt. Moving to our organic constant currency results adjusted for non operating items as defined in the non GAAP financial measures section of our press release, our operating results demonstrated sustained broad based growth across the business.

[Elizabeth Mann, CFO at Verisk Analytics]

In the second quarter, OCC revenues grew 7.9% with balanced growth of 7.7% in underwriting and 8.3% in claims. Our subscription revenues, which comprised 82% of our total revenue in the quarter, grew 9.3% on an OCC basis. This was driven by strong growth across our largest businesses in underwriting and claims, including forms, rules and loss costs, Extreme Event Solutions and Anti Fraud. All three of these businesses delivered strong price realization and expanded renewals as we continue to innovate and improve our core offerings. Additionally, we saw solid double digit growth in Specialty Business Solutions as we continue to see strong acceptance and usage across our white space platform.

[Elizabeth Mann, CFO at Verisk Analytics]

As we look ahead to the second half of the year, we remind you that we will be comparing against strong elevated double digit subscription growth in 2024 that was helped by the conversion of certain contracts to subscription. Additionally, we will be realizing the impact related to federal government spending cuts that we expect to start in the third quarter. Though as we have previously communicated, the federal government contracts represent less than 1% of our total revenue. Our transactional revenues, which comprised 18% of total revenues, returned to growth in the quarter, up a modest 1.8% on an OCC basis. This growth was a function of strength in our international businesses, including property and life health and travel.

[Elizabeth Mann, CFO at Verisk Analytics]

Additionally, we delivered strong revenue growth in our Extreme Events business from securitization as issuance volumes were at record levels. This market continues to attract new capital and market participants turn to Verisk's model as the trusted source on pricing risk. This growth was offset by softness in our auto business related to tough comparisons from last year, customer mix and some competitive pressures, which we expect to persist. Additionally, we are experiencing some weakness in our sustainability business owing to market conditions. Moving to our adjusted EBITDA results.

[Elizabeth Mann, CFO at Verisk Analytics]

OCC adjusted EBITDA growth was 9.7% in the quarter, while total adjusted EBITDA margins, which include both organic and inorganic results, were 57.6%, up two twenty basis points from the prior year. Our reported margins benefited from a foreign exchange translation impact, which contributed 120 basis points in the quarter. This FX benefit was not contemplated in our guidance as we do not forecast or hedge foreign currency. Adjusting for this nonoperational benefit, we still delivered healthy margin expansion, highlighting the effect of strong revenue growth, ongoing cost discipline, and our global talent optimization initiative. As we have shared in the past, we find it useful to look at our margins on a trailing twelve month basis to adjust for seasonality.

[Elizabeth Mann, CFO at Verisk Analytics]

LTM margins came in at 55.6 in the period. As we look to the second half of the year, we want to remind you that we did have some margin variability in the 2024 associated with foreign currency translation. Moving down the income statement, net interest expense was $36,000,000 in the second quarter compared to $29,000,000 in the same period last year due to higher debt balances and higher interest rates. During the second quarter, we retired $500,000,000 of 4% notes that were due in June 2025. Our reported effective tax rate was 22.7% compared to 21.7% in the prior year.

[Elizabeth Mann, CFO at Verisk Analytics]

The year over year increase was driven by a one time tax benefit in the prior year period. Adjusted net income increased 6.3% to $264,000,000 and diluted adjusted EPS increased 8% to $1.88 for the quarter. The increase was driven by strong revenue growth, margin expansion, and a lower average share count. This was partially offset by higher depreciation and interest expenses and a higher tax rate. On a reported basis, net cash from operating activities increased 15.5% to $245,000,000 while free cash flow rose 22.6% to $189,000,000 This increase was driven primarily by the timing of certain cash collections.

[Elizabeth Mann, CFO at Verisk Analytics]

We remain committed to returning capital to shareholders. During the second quarter, we paid a cash dividend of $0.45 per share, a 15% increase from the prior year. Additionally, we completed a $100,000,000 accelerated share repurchase program. As of June 30, we had $1,300,000,000 in capacity under our share repurchase authorization. Turning to our acquisitions.

[Elizabeth Mann, CFO at Verisk Analytics]

We are excited about the growth opportunities ahead with the acquisition of AssuranceBay and AccuLink upon closing. These businesses both have strong financial characteristics, marked by robust revenue and adjusted EBITDA growth and healthy margins that will enhance Verisk's overall growth profile. Additionally, both businesses have a substantial mix of recurring revenues, consistent with our predictable growth model. We are expecting revenue contribution in the range of 40,000,000 to $50,000,000 from all acquisitions this year, assuming that the AccuLynx transaction closes at the end of the third quarter twenty twenty five. And we expect the transactions to be accretive to earnings by year end 2026.

[Elizabeth Mann, CFO at Verisk Analytics]

As Lee discussed, we see strong value creation opportunities from the combination of these businesses with Verisk. We have plans to invest behind the integration to drive durable long term revenue growth and maximize synergies. From a financing perspective, we funded the $163,000,000 purchase of AssuranceBay with cash on hand and closed the transaction on July 17. And we have fully committed debt financing in place supporting the $2,350,000,000 acquisition of AccuLink. This financing will increase our leverage temporarily, bringing it to the high end of our current two to three times target range, but we intend to delever toward the middle of the target leverage range by year end 2026.

[Elizabeth Mann, CFO at Verisk Analytics]

Additionally, we expect our interest expense to increase in the back half of the year, reflecting the new borrowings associated with the deal. Given our strong free cash flow generation, which will only be enhanced by these acquisitions, we intend to continue to repurchase shares as we also delever. These transactions are representations of our disciplined approach and execution of our capital allocation framework. We will continue to actively manage our portfolio both through acquisitions and dispositions to maximize value creation for shareholders. On guidance, we are pleased with our strong results for the first half of the year and we have updated our full year outlook for 2025 to reflect this solid performance as well as to incorporate the impact of our recently announced acquisitions, which are still subject to regulatory approval and closing.

[Elizabeth Mann, CFO at Verisk Analytics]

More specifically, we are raising our outlook for consolidated revenue and now expect it to be in the range of $3,090,000,000 to $3,130,000,000 inclusive of 40,000,000 to $50,000,000 from acquisitions. We are also increasing our outlook for adjusted EBITDA to a range of $1,700,000,000 to $1,740,000,000 We expect adjusted EBITDA margins to remain in the 55% to 55.8% range, reflecting contribution from our acquisitions and some onetime expenses associated with the transaction and integration of these businesses. We expect interest expense to be in the range of 190,000,000 to $210,000,000 reflecting the incremental debt necessary to fund the acquisition of AccuLink. From a tax perspective, we are still expected to be in the range of 23% to 25%, but we will likely come in closer to the low end. Taken all together, we now expect diluted adjusted earnings per share in the range of $6.8 to $7 reflecting strong results in our core business and modest initial dilution from the acquisition.

[Elizabeth Mann, CFO at Verisk Analytics]

We expect the transaction to become accretive by year 2026. A complete list of all guidance measures can be found in the earnings slide deck, which has been posted to the Investors section of our website verisk.com. And now I will turn the call back over to Lee for some closing comments.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Thanks, Elizabeth. Before I close, I want to ask you all to mark your calendars and save the date of 03/05/2026 for our next Investor Day, which will be hosted in Jersey City. We will share more information as it gets closer. We are excited about the growth opportunities ahead and have confidence in delivering on our strategy and value creation. We continue to appreciate all the support and interest in Verisk, given the large number of analysts we have covering us.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

We ask that you limit yourself to one question. With that, I'll ask the operator to open the line for questions.

[Operator]

Thank you. We will now begin the question and answer session. Your first question comes from the line of Manav Patnaik from Barclays. Your line is open.

[Manav Patnaik, MD & Equity Research Analyst at Barclays Investment Bank]

Thank you. Good morning. I was just wondering if on the Acculink's deal, you could just talk about, I'm guessing you provide your estimated property estimating solutions and partner with a lot of other players in the industry as well. So I was hoping you could just address if this changes the dynamic and just some more color on some of the revenue and cost synergies that you would anticipate from this deal? I don't think you mentioned that.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Sure, Manav. Thank you very much. The start of your question really captures, one of the key strategic dimensions that we see with the Acculinks merger. First, that, the property estimating solutions business, while founded originally on providing that estimate of damage, has really evolved into a very valuable network that connects insurers and contractors, third party administrators, remediation specialists, adjusters, and importantly, policyholders. And the AccuLinks component, given the exceptionally strong platform that they have built for roofers, allows us to extend and integrate that network with a core component of insurance related repairs.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

There is, high overlap between our customers. AccuLinx has over 5,000 customers, and we believe that over half of those, we also have relationships with our property estimating solutions business. So that gives you some sense of overlap, that we have and our ability to improve the connectivity that we have. Now that then leads to the synergy opportunity. The immediate opportunities are identifying those Acculinks customers, that are not utilizing our Property Estimating Solutions business as well as, conversely, contractors that are on the PES system that have the ability to utilize the ExactWare suite of products.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

So those are immediate opportunities given the synergies between both of them. In addition, as we referred to, it's not just the network element, but there is a significant benefit in the very precise roofing materials and operating costs that we can utilize with our insurance client base. Recently as recently as I think within the past three months, I had a meeting with a major insurance company CEO who asked specifically, can you provide more detailed, more current and relevant data on the roofing front? And this clearly addresses that. And then beyond that, while Acculinks is focused on the roofing dimension, we believe that there is also applicability to water mitigation and other specialized elements of the repair and restoration function.

[Manav Patnaik, MD & Equity Research Analyst at Barclays Investment Bank]

Elizabeth?

[Elizabeth Mann, CFO at Verisk Analytics]

Yes.

[Elizabeth Mann, CFO at Verisk Analytics]

I'll just add. The synergy front, as Lee highlighted, there's a number of revenue opportunities that we'll be pursuing that we'll build over the next couple of years post close. I'll just add from a cost synergy standpoint, we will always be focused, of course, on efficiency, but this is not an acquisition that's predicated on cost takeout. We've highlighted the attractive margins of the Acculinks business. And so we actually see some opportunity to invest in that business while still maintaining their attractive margins.

[Operator]

Next question comes from the line of Alex Kramm from UBS. Just

[Alex Kramm, MD & Senior Equity Research Analyst at UBS Group]

in terms of the revenue guide, it looks like you really just brought it up for the contribution from M and A by that 40,000,000 to $50,000,000 I think FX should also be helpful given everything that's going on. You're still talking about a very strong beginning of the year and positive outlook. But just seems like given where you're running, you should have brought that up. So just wondering if the outlook is a little bit softer than before. I know you have the government side you're talking about.

[Alex Kramm, MD & Senior Equity Research Analyst at UBS Group]

So just maybe flesh out a little bit what's working better or not as good as you saw it at the beginning of the year. Sorry for the lengthy question.

[Elizabeth Mann, CFO at Verisk Analytics]

Thanks thanks a bunch for the question, Alex. It, it makes sense. And and, yes, as as you look at it, you're right. We're we're very proud of the results that we delivered in the first half of the year. As we look ahead to the second half of the year, we do see a a balanced outlook here and a a couple things that we are keeping our eyes on.

[Elizabeth Mann, CFO at Verisk Analytics]

First of all, there's the comps versus last year and the 2024. Specifically, there were the storms in the 2024 that we called out with the hurricanes there. Also, over the course of the second half of of twenty four, there was really accelerating subscription revenue. Some of that came from some strong renewals that that means that we're lapping that strong growth and and present the headwind on the growth factors, this year. So that's that's the first area on the comps.

[Elizabeth Mann, CFO at Verisk Analytics]

The second factors that we're looking at are some known factors that we called out in the remarks there. Things that you know, developments since we provided the first outlook at the '25. I called out specifically on the federal government contract front that is that is contained, but that is a known factor that will start hitting us in the, in the third quarter. And then we also called out, specifically in the auto business, generally, sort of some short term impact in our UDAS business, including those those auto factors with with some competitive pressure there, as well as some pressure on insurers from the situation in in California moderating some of their their discretionary spend. So those are the known factors.

[Elizabeth Mann, CFO at Verisk Analytics]

We then you know, there are a couple unknown factors like attrition and and weather activities, transactional volumes in our international international businesses. But that, as we look ahead, are some of the things affecting us in the second half. I will just I will just, finish that by saying that, you know, the the core value in the business and the the strength of the business remains remains strong. Yeah. And the full year outlook at still 6% to 8% organic is very consistent with our overall guidance.

[Alex Kramm, MD & Senior Equity Research Analyst at UBS Group]

Fair enough.

[Operator]

Your next question comes from the line of Kelsey Xu from Autonomous Research. Your line is open.

[Kelsey Zhu, Financial Information Technology Analyst at Autonomous Research]

Hi, good morning. Thanks for taking my question. In auto, outside of the tougher comps and shopping activity and maybe some impact from contract conversions. I think you called out a couple of times the competitive pressure there. So I was just wondering if you can add more colors, who are you seeing these competitive pressures from?

[Kelsey Zhu, Financial Information Technology Analyst at Autonomous Research]

And, just any colors from your conversations with customers there, that would be really helpful.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Yes.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Thank you, Kelsey. I appreciate the question. I think a comment I would make is in the auto space, there are there is a large competitor that we face where we don't have the same scale in that business. It's an area where we have competed successfully, but from time to time, we do face greater pressures in that area. But it's one where we continue to work to find dimensions of our other businesses where we can supplement what we do, for instance, by tying claims related data onto underwriting data and providing innovative solutions on that front.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

But it is an area, even while it's less than 10% of our total business, where, in our auto related businesses, but it's one where we are subject to occasional competitive pressure.

[Operator]

Your next question comes from the line of Toni Kaplan from Morgan Stanley. Your line is open.

[Toni Kaplan, Executive Director & Lead Analyst - Equity Research at Morgan Stanley]

Thank you. I wanted to go back to Acculynx. You sort of characterized it as the leading SaaS platform in that part of the market. I was wondering if that is sort of a priority for you. I know in the past, you've tried to integrate with, a number of, you know, PNC insurance SaaS platforms.

[Toni Kaplan, Executive Director & Lead Analyst - Equity Research at Morgan Stanley]

Is that an area that strategically, we should expect to see more sort of going towards, that type of a platform or, you know, product set, just in the future? Thanks.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Yeah. Thank you, Jenny. It's a great question. And, I think, you know, in in fairness, if you if you look at a lot of our existing businesses, well, of course, everybody understands us in one dimension as a data and analytics, business. A lot of our businesses are effectively software or SaaS related businesses, where through software, we are connecting key underwriting or claims functions.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

And certainly, the PES business is a representation of that. And so while we can we can say that, you know, this this is clearly a strong SaaS platform, that element of connectivity for the client and tying together their internal processes as well as serving as a means to integrate that contractor into a broader ecosystem in the restoration and repair function, connecting contractors, adjusters, and insurers in that process is a natural fit. You also may be aware from our past comments that our Extreme Events business is in the process of migration to SaaS platform, which will facilitate the efficiency and the speed and the compute capability of a lot of our modeling businesses. And as well, within our underwriting business, I'll ask Saurabh Kemka to comment on this, we also have been developing many integration functions in our Core Lines reimagine element that are you can describe as software related or connectivity related.

[Saurabh Khemka, Co-President - Underwriting Solutions at Verisk Analytics]

Yeah. Thank you, Lee. Absolute absolutely. If you look at our Coreline Stream Imagine program, the central point of that is the core.verus.com platform, which brings in all our content in one place and offers the opportunity for our customers to integrate that into their workflow. And this is where we're getting great feedback where customers are saying, look.

[Saurabh Khemka, Co-President - Underwriting Solutions at Verisk Analytics]

This is now the one stop shop for all the content that you provide, which is the premier content in the industry. But now I can in integrate that into my workflow and get a lot of efficiency. So that connectivity is very important to us.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

And that's that's the essence, Tony, that I just wanna leave you with is that while, you know, our, legacy function of collecting data across the industry, cleansing that data, which requires a lot of expertise and a lot of work and distributing it, is a foundation of the business. Increasingly, the connectivity function, that substantiates a network element to our business, is where we see an additional opportunity for us to continue to grow and serve the industry. And it's certainly something that, in our conversations with our clients, connecting that ecosystem is a role that Verisk is uniquely well positioned to address.

[Operator]

Your next question comes from the line of Jeff Meuler from Baird. Your line is open.

[Jeffrey Meuler, Senior Research Analyst at Robert W. Baird]

Yes. Thank you. Congrats on Acculinks. In terms of its strong growth, can you just help us understand, I guess, the drivers or the penetration rates in its core market? I guess I'm just trying to understand the sustainability of that level of growth.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Thanks, Jeff. So I'm going to start this off, and then I'm going to turn it over to Aaron Brunko, who leads our Property Estimating Solutions business. But from my standpoint, the growth dynamic has been that AccuLinx really developed a specialized SaaS integrated service platform that was specifically focused on the roofing function. And its founder was originally a roofer, knew that business well. And they have successfully penetrated that roofing business, which is a, as you can imagine, a very large business, by creating a competitively differentiated product specialized to the needs of that particular function.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

So there continues to be a significant opportunity to penetrate that opportunity as well as as you add more value to that function, then that creates more value for the roofer and then sustains overall pricing benefit. To give you a sense of our estimate of the TAM for that roofing sector as it exists on its own, it's approximately a $2,000,000,000 TAM. And as we've conveyed, AccuLinx is looking at approximately $150,000,000 in 2025 revenue. So it gives you a sense of the ongoing penetration opportunity. But Aaron, perhaps in terms of ongoing growth and the opportunity that we see in conjunction with the property estimating solutions, perhaps you can give Jeff some additional color.

[Aaron Brunko, President - Property Estimating Solutions at Verisk Analytics]

Yes. Thank you, Lee. And Jeff, appreciate the question. So just when you think about the growth within the market, there are a large number of roofers that really represent white space opportunity within the market itself. One of the other things that we've noticed is a lot of roll ups through private equity that have occurred that also put Acculinks really in a very strong growth position over the next several years from the analysis that we've seen.

[Aaron Brunko, President - Property Estimating Solutions at Verisk Analytics]

So not only do we have the increase in severe convective storms, we have more sophisticated needs, if you will, in the roofing market. And that general changing demographic that further supports that deeper penetration of the TAM is very much what we're focused on.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Thank you, Aaron. And Jeff, one other dimension that I want to mention, you'll see this in the slides that we've presented on the strategic rationale. While we're focusing on the contractors, the other interesting dimension that Acculinks has developed is the relationships that they've built with the suppliers in which they are providing for direct negotiation, delivery and pricing on materials. And that dimension is, I think, still in a relatively early stage, specifically at AccuLink, so an opportunity to expand there. And then of course, potentially to expand that more broadly to our other contractor relationships.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

So that's another dimension of growth that's supporting the core business.

[Operator]

Your next question comes from the line of Ashish Sabadra from RBC Capital Markets. Your line is open.

[Ashish Sabadra, Analyst - Information and Business Services at RBC Capital Markets]

Thanks for taking my question. Just wanted to follow-up on the Accolynx revenue growth. Obviously, very strong revenue growth profile, but I just wanted to understand if there is any kind of cyclicality, property estimating solution of an experience, strength related to extreme event, particularly hurricanes. Does Acculink also exhibit similar cyclicality? And then maybe just on the investment, Elizabeth noted or you also noted some potential for more investments there.

[Ashish Sabadra, Analyst - Information and Business Services at RBC Capital Markets]

So any color on how should we think about those investments for this business?

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Thank you, Ashish. So let me address the cyclicality issue, and then I'll turn it over to Elizabeth on the investment side. It was something that we looked at very carefully to understand that. And we brought in a third party consultant to evaluate that for us and then applying our own knowledge. And we found that there's actually relatively low cyclicality that the roofing and repair business is more driven by just overall the overall home stock, which as you can imagine from a scale standpoint is much more significant.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

I mean it's a massive, massive market when you think about the number of residential homes. And of course, there is going to be an ongoing regular level of repair and restoration that is required associated with those roofs. And so it has tends not to have significant swings as a business that, let's say, is more closely aligned with the mortgage business or the construction business. So I think we're comfortable that it's a relatively low level of cyclicality based upon what we've seen.

[Elizabeth Mann, CFO at Verisk Analytics]

Thanks, Lee. And the one thing I'll add to that, that I agree with that on cyclicality. From a seasonality standpoint, there is less roofing work that takes place, in the winters, when it's very cold. It's not possible to do that. So there there may be just a bit of seasonality in that, during the winter months.

[Elizabeth Mann, CFO at Verisk Analytics]

From an investment standpoint to the second part of your question, yes. You know, Acculink, as as we acquired them, was run, fairly fairly leanly as a private company. We will have, two two elements of investment in the business. One is, one is kind of building out some of the, public company functions as they join the Verisk family. But the second and the more important is really to continue to build, behind the revenue synergies and the the product development opportunities that we see, to combine it with the property estimating solutions suite of products.

[Elizabeth Mann, CFO at Verisk Analytics]

To to give some, you know, confidence on that, we've that the business, is accretive to Verisk from an overall margin standpoint, and and we expect to be able to maintain that.

[Operator]

Your next question comes from the line of Faiza Alwy from Deutsche Bank. Your line is open.

[Faiza Alwy, MD - US Company Research at Deutsche Bank]

Yes. Hi. Thank you. I wanted to ask about some of the new AI products that you discussed in your prepared remarks, Lee. In particular, the, AI automated underwriting function.

[Faiza Alwy, MD - US Company Research at Deutsche Bank]

And curious if you think the industry is sort of ready to adopt to that. And maybe if you can talk about, you know, pricing perspective around that and if that increases your ability to, price for value.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Thank you, Faiza. I'm going to turn it over to Saurabh. I think, to your general question, one of our value adds is developing products and applying new technology and then testing it with the industry. And across the industry, as I think with most, you have early adopters, have fast followers, you have kind of conservative front conservative players that are more resistant to change. But I think that we're in that unique position of being able to test this.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

But I think in each of these cases, and we've talked about three of them, we're seeing a high degree of interest in varied levels of of adoption.

[Saurabh Khemka, Co-President - Underwriting Solutions at Verisk Analytics]

Yeah. Absolutely. So I'll talk about the two around our POS AI tool and Mozart AI tool, and I'll just highlight the adoption of these tools has been really good. In on the POS side, we have almost a quarter of our users already using it. They love it.

[Saurabh Khemka, Co-President - Underwriting Solutions at Verisk Analytics]

They see a lot of efficiency from a time perspective for them. And what we're getting the feedback is this is helping us kind of build the value for the underlying tool as well. So the underlying information is great, but adding an AI component to it increases the value to our customers. On the Mozart side, which is our forms management platform, almost half of our customers have started using it. And, again, this is a huge time efficiency saving for them, and they are also enjoying the tool. And we expect to add more functionality to it.

[Operator]

Your next question comes from the line of Peter Gregory Peters from Raymond James. Your line is open.

[C. Gregory Peters, MD - Insurance at Raymond James]

Thank you. A number of questions. I have to pick one. I'm gonna focus on the capital comments, given the transaction. Maybe you can go back and just talk about you said your your the the leverage is gonna go to the upper end of the range, and then you're going to delever and at the same time buy stock back.

[C. Gregory Peters, MD - Insurance at Raymond James]

So just wondering how the mechanics of that work and, you know, just looking forward how you see that unfolding.

[Elizabeth Mann, CFO at Verisk Analytics]

Yeah. Thanks thanks for the question, Greg. Yes. So we will, we will raise debt, to complete the transaction. That will be a mix of, term debt and, bank debt, which is which has prepayability to it.

[Elizabeth Mann, CFO at Verisk Analytics]

So we will be able to, pay pay that down over time, at a at a steady rate and and within our control. So we can with our strong free cash flow, which will be enhanced by these acquisitions, we can choose, to do a mix and a combination of debt pay down while maintaining our share repurchase activity, likely at a lower rate than what we've been doing, in the past when we had no M and A, but we will still maintain that share repurchase activity.

[Operator]

Your next question comes from the line of Andrew Steinerman from JPMorgan. Your line is open.

[Andrew Steinerman, Equity Research Analyst - Business & Info Services at JP Morgan]

Hi. I know you've labeled Acculinks as the leading provider of SaaS in the roofer space. Could you just tell us who do they compete with? I'm assuming you're going to say service titan, but if that's true, how does AccuLink distinguish itself and just go over the competitive landscape for SaaS?

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Andrew, I'm impressed that you're familiar with the contractor SaaS models. ServiceTitan is a competitor. JobNimbus is also in that space. They generally are providing more general contractor services. And so the competitive differentiation for Acculinks is their specialization on the specific needs, both from a materials and from a process and a job management perspective for those roofing contractors.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

I'll ask Aaron to add to that if there's anything he would like to share on competitive front. Aaron?

[Aaron Brunko, President - Property Estimating Solutions at Verisk Analytics]

Lee, I think you covered it well just in terms of the companies that you had named. They certainly Acculinks is the premier provider within the roofing SaaS market. So I think you covered that one well, Lee.

[Andrew Steinerman, Equity Research Analyst - Business & Info Services at JP Morgan]

Thanks, Aaron.

[Aaron Brunko, President - Property Estimating Solutions at Verisk Analytics]

Thanks.

[Operator]

Your next question comes from the line of David Motemaden from Evercore. Your line is open.

[David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Hey, thanks. Good morning. Also had a question on AccuLinx. So I think it's around 5% of your existing revenues, but it's also growing in the mid to high teens. And then you also called out a decent sized cross sell opportunity.

[David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI]

I'm wondering if this changes at all your view of the 6% to 8% OCC growth target once we fully get this into organic in 2027.

[Elizabeth Mann, CFO at Verisk Analytics]

Yeah. Thanks for the question, David. We will, we will have to take a look at that as we as we unfold into 2027. Obviously, it is it is unquestionably additive from a growth standpoint. As you say, it's a smaller percent of the total, so we'll we'll see we'll see how it shakes out.

[Operator]

Your next question comes from the line of Jason Hoss from Wells Fargo. Your line is open.

[Jason Haas, Director & Senior Equity Research Analyst at Wells Fargo]

Hey. Good morning, and thanks for taking my question. It looks like we're seeing moderating net written premium growth this year after several years of very strong growth. So I'm curious if it's possible that you'll be able to continue to take price at the same rate that you you have been, you know, given all that you've been delivering to your customers, the core lines you imagine, your other investments, or should we expect that that pricing will start to moderate? I guess it would it would be in 2027 given the two year lag.

[Jason Haas, Director & Senior Equity Research Analyst at Wells Fargo]

But, yeah, if you could help explain that dynamic, that'd that'd be helpful. Thank you.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Yep. Thank you, Jason. You know, and I think your observation is fair. It's something that we watch. I'm gonna turn it over to Saurabh Kamka, to give you color on that.

[Saurabh Khemka, Co-President - Underwriting Solutions at Verisk Analytics]

Yes, absolutely, Jason. You're right. I mean, are seeing industry premium growth slowing. It depends on there's some variation on the lines as well as whether it's property versus liability. And as you noted, for the portion of our contracts that are tied to this annual premium growth, that impact will be lagged.

[Saurabh Khemka, Co-President - Underwriting Solutions at Verisk Analytics]

However, more of our revenue is tied to longer term contracts. And where we when we are renewing these contracts, our customers are projecting that slowdown, we are architecting long term deals to incorporate both this growth period as well as this, you know, slower growth period. So we offer clients that stability over long terms of their contracts and it enables us to have more pricing visibility. I'd also add that look premium is one component of our pricing and what we're really focused on within these renewals is highlighting the value that our customers see. And this is being helped by our investment in our Core Lines reimagine program.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Yes. And the other thing that I would add, Jason, is if you look at the long term growth within the Core Insurance business, we clearly have seen cyclicality in premium growth, hard markets and soft markets, and it has still enabled us to deliver a highly consistent organic growth range in 6% to eight percent range. In addition, beyond that exposure, we continue to have see strong growth in our SBS and Life businesses, which are penetrating new opportunities and are not tied to overall premium growth.

[Operator]

Your next question comes from the line of Andrew Nicholas from William Blair. Your line is open.

[Andrew Nicholas, Research Analyst - Global Services at William Blair]

Hi, good morning. Thanks for taking my question. Kind of wanted to stick with the organic growth theme. Last three quarters now, you're at or in the fourth quarter's case slightly above the 6% to 8% range that you outlined at Investor Day a couple of years ago. Just kind of curious, if we look at the last three quarters in particular, are there any kind of components of the long term growth algorithm between price, new customers, upsell, cross sell, new initiatives, client consolidation, all the different drivers that you outlined a few years back that are running, you know, at the top end of those ranges or even above?

[Andrew Nicholas, Research Analyst - Global Services at William Blair]

Just trying to get a sense, and frame recent momentum relative to the way that you kind of constructed that top line growth algo, back at the Investor Day in 2023? Thank you.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

Yes. Andrew, thank you very much for the question. And I'm going to build off a comment that Saurabh ended on. I think the biggest, the most important element to our ability to have outperformed has been investing in and communicating and realizing the incremental value for our clients from the investments that we've made across the businesses. We've seen that most clearly in the investment that we made in our Core Lines reimagine program to increase their usability of the data, the efficiency of their process.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

We've heard this not only directly but indirectly from an investor that was doing their own diligence and spoke to multiple of our clients to see if they were getting value out of it. And it was consistently very positive. I think that, that has also been added by the fact that our engagement at a senior level has allowed us to better articulate the value that we provide to them and understand where we can be making investments that are very relevant to what we're doing. I mentioned before that I had the meeting with an insurance company CEO who emphasized the roofing data element of improving that roofing data component. And so that was clearly a factor that we considered in the merits of this acquisition.

[Lee Shavel, CEO, President & Director at Verisk Analytics]

So that's what I would cite as probably the most important contributor to the overall growth in our business.

[Elizabeth Mann, CFO at Verisk Analytics]

Thanks, Lee. And then to dimensionalize that and map that against the factors, Andrew, that you were that you were qualifying. I think as we think about our build, that that engagement and that value delivery has enabled us to deliver at the high end of the range or in some occasionally, the range on the factors of pricing as we highlight the value, on the factors of cross sell and upsell, as well as the fact that attrition has been lower. So I think those those three factors have really contributed to the strong recent strength. As I think I highlighted in the near term, there's you know, those create a a short term, you know, tough comps.

[Elizabeth Mann, CFO at Verisk Analytics]

And then, you know, and then as we as we lap through that, we will maintain the growth.

[Operator]

Your next question comes from the line of George Tong from Goldman Sachs. Your line is open.

[George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs]

Hi, thanks. Good morning. Your transactional revenue growth returned positive territory in the quarter, and that was led by international performance in the securitization market. Can you talk about to what extent you expect international and securitization trends to continue into the second half?

[Elizabeth Mann, CFO at Verisk Analytics]

Yeah. Thanks for the question, George. Let me start. On the securitization, that is a market that is really primarily in the second quarter, year in, year out. So that is something that we do not expect to be very active in the second half of the year.

[Elizabeth Mann, CFO at Verisk Analytics]

And as you look at first half, second half comps, that is that would be a headwind. On the international transactional activity, that is a bit more difficult to to predict. It has been a it was a benefit in the second quarter. From a from a comparability standpoint, the activity may be less in the second half, so that's a bit a bit weather and and and volume dependent. As we think about transactional activity overall in the second quarter, we also have the headwinds from the sorry, I'm sorry, transactional activity in the second half.

[Elizabeth Mann, CFO at Verisk Analytics]

We will have the headwinds from the storm comparison from some of the underwriting data and analytics solutions pressure that I highlighted before. And and at though at a lower level than before, we still do have some conversion to subscription going on across the portfolio. So but still some potential headwinds on transactions in the second half of the year.

[Operator]

Your final question comes from the line of Russell Quelch from Rothschild and Company, Redburn. Your line is open.

[Russell Quelch, Managing Director at Rothschild & Co Redburn]

Thank you. Thanks for squeezing me in. Liam and Elizabeth, what is the hurdle rate you've considered when making these two acquisitions recently? I'm wondering what to expect in terms of or what you're planning for or modeling for in your return on invested capital in the near term.

[Elizabeth Mann, CFO at Verisk Analytics]

Thanks. Yeah. Thanks for the question, Russell. Yeah. We we evaluate our acquisitions on a ROIC framework, return on invested capital, and we target acquisitions that have a return on invested capital above our WACC in in a three year period.

[Elizabeth Mann, CFO at Verisk Analytics]

We see good strategic merit in these acquisitions, so we're looking for them to deliver value over time.

[Operator]

And this concludes today's conference call. We thank you for your participation, and you may now disconnect.

Participants

Executives

• Stacey Brodbar, Head of Investor Relations & FP&A
• Lee Shavel, CEO, President & Director
• Elizabeth Mann, CFO
• Saurabh Khemka, Co-President - Underwriting Solutions
• Aaron Brunko, President - Property Estimating Solutions

Analysts

• Manav Patnaik, MD & Equity Research Analyst at Barclays Investment Bank
• Alex Kramm, MD & Senior Equity Research Analyst at UBS Group
• Kelsey Zhu, Financial Information Technology Analyst at Autonomous Research
• Toni Kaplan, Executive Director & Lead Analyst - Equity Research at Morgan Stanley
• Jeffrey Meuler, Senior Research Analyst at Robert W. Baird
• Ashish Sabadra, Analyst - Information and Business Services at RBC Capital Markets
• Faiza Alwy, MD - US Company Research at Deutsche Bank
• C. Gregory Peters, MD - Insurance at Raymond James
• Andrew Steinerman, Equity Research Analyst - Business & Info Services at JP Morgan
• David Motemaden, MD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI
• Jason Haas, Director & Senior Equity Research Analyst at Wells Fargo
• Andrew Nicholas, Research Analyst - Global Services at William Blair
• George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs
• Russell Quelch, Managing Director at Rothschild & Co Redburn