Executive Summary / Key Takeaways

• Strategic Transformation Driving Predictable Growth: Verisk has successfully repositioned itself as an insurance-focused, integrated technology network, delivering consistent organic constant currency (OCC) revenue growth of 7.9% in Q2 2025, driven by strong subscription momentum and value-based pricing.
• Technological Leadership and AI Integration: The company's significant investments in proprietary data and advanced AI tools, such as Underwriting Assistant and PAAS AI, provide quantifiable benefits like 95% faster research and automated submissions, cementing its competitive moat and enhancing client efficiency.
• Strategic M&A Expanding Ecosystem Reach: Recent acquisitions of SuranceBay and AccuLynx (pending) strategically extend Verisk's network capabilities into life & annuity distribution and property restoration, respectively, with AccuLynx adding a compelling financial profile and significant cross-sell synergies.
• Robust Financial Health and Disciplined Capital Allocation: Verisk demonstrates strong cash flow generation, enabling substantial returns to shareholders through dividends and buybacks, while maintaining a disciplined approach to M&A that targets accretive returns on invested capital.
• Outlook Reflects Confidence Amidst Headwinds: The updated 2025 guidance projects consolidated revenue of $3.09B-$3.13B and diluted adjusted EPS of $6.80-$7.00, reflecting core business strength and acquisition impact, despite challenges like auto market softness and federal spending cuts.

The Architect of Insurance Intelligence

Verisk Analytics, Inc., founded in 1971, has evolved into an indispensable strategic data analytics and technology partner to the global insurance industry. The company empowers clients to enhance operating efficiency, improve underwriting and claims outcomes, combat fraud, and make informed decisions about global risks, including climate change and extreme events. Its core business model is predominantly subscription-based, providing a predictable revenue stream. This foundational strength is critical in an industry increasingly reliant on data-driven insights to navigate complex and dynamic market conditions.

The company's strategic journey has been marked by a deliberate transformation. Approximately three years prior to Q2 2025, Verisk unveiled a "new Verisk," sharpening its focus on the insurance sector. This involved a strategic divestiture of non-core assets, including its healthcare data analytics subsidiary in 2016 and its specialized markets business in 2022, culminating in the sale of Atmospheric and Environmental Research (AER) in Q4 2024. These actions streamlined the portfolio, allowing Verisk to concentrate on its core mission and evolve from an industry utility to a data analytics specialist, and now, to an integrated technology network.

Verisk's competitive positioning is rooted in its proprietary data assets, deep domain expertise, and advanced technological capabilities. In the broader data analytics landscape, Verisk competes with diversified information providers like RELX Group (LexisNexis Risk Solutions), Moody's Corporation , Equifax Inc. (EFX), and S&P Global Inc. (SPGI). While these rivals offer broad data aggregation and risk assessment services, Verisk differentiates itself through specialized, industry-specific solutions. Its focus on the nuances of insurance underwriting, claims, and catastrophe modeling allows it to offer more tailored and precise insights. This specialization often translates into superior operational execution in its niche markets.

The company's technological prowess is a significant competitive moat. Verisk leverages advanced analytics, software, and scientific research to deliver its solutions. For instance, its catastrophe models, a cornerstone of its Extreme Event Solutions, incorporate cutting-edge weather science and detailed understanding of local building codes. This allows for a granular and accurate view of probable loss outcomes, a critical advantage in a world facing escalating climate risks.

Technological Edge and Innovation at Scale

Verisk's commitment to innovation is evident in its continuous development of advanced technologies, particularly in artificial intelligence (AI) and cloud-native platforms. These technological differentiators provide tangible, often quantifiable, benefits to its clients, reinforcing Verisk's value proposition and competitive standing.

Within its Core Lines Reimagine initiative, Verisk has introduced several AI-powered tools designed to enhance efficiency and accuracy. The Premium Audit Advisory Service AI (PAAS AI) chatbot, for example, enables insurers to research classifications and rules over 95% faster than legacy solutions. This significant time-saving directly translates into improved operational efficiency for clients. Similarly, the Mozart Compare with AI tool, integrated into its forms management platform, allows customers to quickly identify changes in ISO coverage language, saving considerable time and eliminating complexity in managing forms updates. Nearly half of Verisk's customers are already utilizing this feature.

A groundbreaking innovation is the AI-powered Underwriting Assistant, now in early commercial introduction. This solution automates the creation of structured commercial property submissions, transforming a process that traditionally took days or weeks into mere minutes. This not only accelerates decision-making but also frees underwriters from lower-value data capture activities, allowing them to focus on more strategic tasks. The Underwriting Assistant also enhances data accuracy through data augmentation, leveraging Verisk's extensive commercial property data sets to provide more reliable and complete information.

Beyond AI, Verisk is building robust, cloud-native platforms. The Enterprise Exposure Manager, a cloud-native solution, combines capabilities from Specialty Business Solutions and Extreme Events to evaluate enterprise-wide risk across billions of locations. This scalable platform provides real-time insights into portfolio-wide risk accumulations, a crucial tool for Chief Risk Officers. Looking ahead, Verisk Synergy Studio, set to launch in 2026, will reimagine the core catastrophe modeling software into a fully cloud-native, scalable workflow solution. This platform promises a lower cost of ownership for clients and will serve as an ecosystem hub, further integrating Verisk's global suite of catastrophe models.

These technological advancements are not merely product enhancements; they are strategic investments that deepen Verisk's competitive moat. By offering superior precision, speed, and integration capabilities, Verisk can command value-based pricing, leading to stronger renewals and expanded client relationships. This technological leadership allows Verisk to compete effectively against broader data providers by offering specialized, high-value solutions that are difficult for competitors to replicate without deep industry knowledge and proprietary data.

Financial Performance and Strategic Expansion

Verisk's financial performance in the second quarter of 2025 underscores the effectiveness of its strategic transformation. The company reported consolidated revenues of $772.60 million, an increase of 7.8% year-over-year. For the six months ended June 30, 2025, revenues reached $1,525.60 million, up 7.4% from the prior year. This growth was broad-based across both its Underwriting and Claims segments.

Subscription revenues, which constitute a significant 82% of total revenue in Q2 2025, grew 9.3% on an organic constant currency (OCC) basis. This consistent strength is a direct result of the company's enhanced go-to-market strategy, which has fostered deeper client engagement and enabled value-based pricing. The Core Lines Reimagine initiative, in particular, has driven strong renewals by delivering tangible improvements in product value. Transactional revenues, representing 18% of the total, returned to modest growth of 1.8% on an OCC basis in Q2 2025, driven by international businesses and record securitization volumes in Extreme Event Solutions, partially offsetting prior declines due to contract conversions and softness in the auto business.

Profitability metrics reflect the company's operational discipline. While GAAP net income and diluted EPS saw a decline in Q2 2025 ($253.30 million and $1.81, respectively), this was primarily due to a non-recurring $102 million net gain in the prior-year period from disposed businesses and debt extinguishment. On an OCC basis, adjusted EBITDA grew 9.7% in Q2 2025, demonstrating healthy margin expansion. The reported adjusted EBITDA margin of 57.6% in Q2 2025, though benefiting from foreign exchange translation, still showcased strong underlying expansion driven by revenue growth and cost discipline, including benefits from global talent optimization efforts.

Verisk's robust cash flow generation is a hallmark of its subscription-based model. Net cash provided by operating activities increased 15.5% to $244.50 million in Q2 2025, with free cash flow rising 22.6% to $189 million. This strong cash flow supports the company's disciplined capital allocation strategy, which prioritizes organic investment, strategic mergers and acquisitions (M&A), and returning capital to shareholders. The company has returned over $1 billion in capital to shareholders for three consecutive years (2022-2024), and the Board recently approved a 15% dividend increase and an additional $1 billion share repurchase authorization, signaling confidence in its economic model.

Strategic M&A continues to play a vital role in Verisk's growth trajectory. In April 2025, Verisk acquired Simplitium from NASDAQ for $19.7 million, integrating it into its Extreme Events business. This acquisition provides access to over 300 third-party models, expanding Verisk's presence in Europe and enhancing its ability to help insurers leverage holistic data. On July 17, 2025, Verisk acquired SuranceBay for $162.5 million, a leading provider of producer licensing solutions for the life and annuity industry. This move extends Verisk's reach into the independent agent channel, streamlining insurance distribution by integrating with its FAST platform.

The most significant recent M&A initiative is the definitive agreement to acquire AccuLynx for $2.35 billion, announced on July 29, 2025. AccuLynx is the leading SaaS platform for residential restoration and repair, particularly in roofing. This acquisition is a natural extension of Verisk's property estimating solutions business, given the high degree of customer overlap. The combination is expected to create strong incremental value through seamless integration, improved information flow between carriers and contractors, and enhanced data sets on roofing materials and labor. AccuLynx's compelling financial profile, marked by robust revenue growth and EBITDA margins that are accretive to Verisk overall, and a high mix of recurring revenues, aligns perfectly with Verisk's predictable growth model. The roofing sector itself represents a substantial $2 billion total addressable market (TAM), with AccuLynx's 2025 revenue projected around $150 million, indicating significant penetration opportunity.

Outlook and Key Considerations

Verisk's updated full-year 2025 outlook reflects its strong first-half performance and the anticipated impact of its recent acquisitions. The company now expects consolidated revenue in the range of $3.09 billion to $3.13 billion, which includes $40 million to $50 million from acquisitions. Adjusted EBITDA is projected to be between $1.7 billion and $1.74 billion, with adjusted EBITDA margins in the 55% to 55.8% range. This margin outlook incorporates the accretive contribution from acquisitions, alongside some one-time expenses associated with transaction and integration. Diluted adjusted EPS is guided to be between $6.80 and $7.00, with the AccuLynx transaction expected to become accretive by year-end 2026.

The company's outlook is based on several key assumptions, including the closing of the AccuLynx transaction by the end of Q3 2025, current foreign currency exchange rates, interest rates, and tax rates. Interest expense is anticipated to increase to $190 million to $210 million, reflecting the incremental debt taken on for the AccuLynx acquisition. This will temporarily push leverage to the high end of Verisk's 2x to 3x adjusted EBITDA target range, though the company intends to delever towards the middle of this range by year-end 2026, supported by its strong free cash flow. Capital expenditures are expected to be between $245 million and $265 million, reflecting continued organic investment in the business.

Despite this confident outlook, several factors warrant investor attention. The company faces tough comparisons in the second half of 2025 due to strong subscription growth in the prior year and elevated storm-related transactional activity. Softness in the auto business, driven by competitive pressures and customer mix, is expected to persist. Additionally, federal government spending cuts, though impacting less than 1% of total revenue, are anticipated to begin in Q3 2025. The situation in California, with its unique regulatory environment and significant wildfire losses (estimated $28B-$35B for recent LA fires), could also moderate some discretionary spend from insurers. Legal proceedings, including telematics and data privacy litigation, remain in early stages, with potential liabilities currently unquantifiable.

In the competitive landscape, Verisk's specialized focus and technological leadership provide a robust defense against larger, more generalized data providers. While companies like RELX (RELX) and Moody's (MCO) offer broad financial and risk data, Verisk's deep integration into the insurance workflow and its proprietary, AI-driven models for specific insurance challenges (e.g., catastrophe modeling, fraud detection, underwriting automation) give it a distinct advantage in delivering actionable insights. Its network effects, particularly in claims and property estimating, create high switching costs and foster long-term client relationships, contributing to its predictable revenue streams.

Conclusion

Verisk Analytics is executing a compelling transformation, solidifying its position as an indispensable technology and data partner to the global insurance industry. By strategically focusing its portfolio, investing heavily in cutting-edge AI and cloud-native platforms, and pursuing accretive M&A, Verisk is enhancing its ability to deliver value-driven solutions that improve efficiency, accuracy, and risk management for its clients. The company's strong financial performance, characterized by consistent subscription growth and robust cash flow, provides the foundation for continued investment and shareholder returns.

While macroeconomic headwinds and competitive dynamics in certain segments present challenges, Verisk's deep industry integration, proprietary technology, and expanding ecosystem create a durable competitive advantage. The strategic acquisitions of SuranceBay and AccuLynx further underscore its commitment to building an integrated technology network, poised to capture significant opportunities in the evolving insurance landscape. For discerning investors, Verisk represents a high-quality investment in a critical sector, driven by technological leadership and a clear path to sustained, predictable growth.