Executive Summary / Key Takeaways

• Verisk Analytics (NASDAQ:VRSK) stands as an indispensable strategic data analytics and technology partner to the global insurance industry, leveraging proprietary data and advanced AI to drive efficiency and informed decision-making.
• The company demonstrated robust financial performance in Q3 2025, with organic constant currency (OCC) revenue growth of 5.5% and strong subscription revenue growth of 8.7%, contributing to an expanded adjusted EBITDA margin of 55.8%.
• Verisk is actively integrating AI across its solutions, with tools like XactXpert and XactAI showing significant client adoption and sales outperformance, while new generative AI offerings are streamlining underwriting and claims processes.
• Strategic acquisitions, including SuranceBay and Simplitium, are expanding Verisk's ecosystem and capabilities, though the larger AccuLynx acquisition faces a delay in FTC approval, impacting 2025 guidance.
• Despite temporary headwinds from light severe weather and auto market softness, Verisk maintains a confident long-term outlook, projecting 6% to 8% OCC revenue growth, fueled by its value-driven pricing strategy, continuous innovation, and deep client engagement.

The Unseen Architect of Insurance Resilience

Verisk Analytics, Inc., founded in 1971, has evolved into a critical strategic data analytics and technology partner for the global insurance industry, headquartered in Jersey City, New Jersey. The company's core mission is to empower clients to enhance operating efficiency, improve underwriting and claims outcomes, combat fraud, and make informed decisions regarding global risks, including climate change and extreme events. This foundational role has positioned Verisk as a central utility, consistently delivering growth across diverse macroeconomic and insurance-specific operating environments.

Verisk's journey has been marked by strategic portfolio management, including the divestiture of its healthcare data analytics subsidiary in 2016 and its specialized markets business in 2022. A significant transformation around 2022-2023 saw the emergence of a "new Verisk," sharply focused on predictable growth within the insurance sector. This involved implementing structural and cultural changes to foster greater integration, elevating strategic dialogues with clients, and transitioning from a traditional industry utility to an integrated technology network driven by innovation.

Technological Leadership and AI-Driven Innovation

Verisk's competitive moat is deeply rooted in its proprietary technology and extensive data assets. The company's content, encompassing data, language, analytics, and models, is built upon non-publicly available, structured, cleansed, and vetted data, specifically designed to leverage the power of artificial intelligence (AI). This proprietary data is becoming even more valuable with increasing AI utilization, as it enhances usability and breadth for clients.

Verisk's AI strategy is multifaceted, focusing on both client-facing solutions and internal process enhancements. Deployed AI applications have been "enthusiastically embraced" by clients. For instance, XactXpert, an AI-powered tool, advises claims professionals in estimate review and is currently utilized by over 40 clients, including six of the top ten carriers. Its year-to-date sales performance has more than doubled original quotas. Building on this success, XactAI, launched in October 2025, adds generative AI capabilities like photo tagging to XactXpert and already boasts 273 users, including a top ten carrier.

In underwriting, Verisk introduced the Premium Audit Advisory Service (PAAS) AI chatbot, enabling insurers to research classifications and rules approximately 95% faster than legacy solutions. Similarly, Mozart Compare with AI allows customers to quickly identify changes across ISO forms, saving significant time and reducing complexity in managing coverage language updates. The Commercial GenAI Underwriting Assistant, in its early commercial stages, automates the creation of structured commercial property submissions, reducing decision time from days or weeks to minutes. This solution also enhances data accuracy through augmentation with Verisk's extensive commercial property data sets and provides real-time expert advice via an interactive chatbot.

Internally, Verisk leverages AI to enhance its own processes and product development. In its Extreme Events business, deep learning AI models are used to correct biases in climate model outputs, ensuring the frequency and intensity of extreme events align with observed reality. Generative AI techniques further introduce details that capture the local impact of these large events. These technological advancements contribute directly to Verisk's competitive moat by offering superior accuracy, efficiency, and speed, translating into higher value for clients and stronger pricing power for Verisk.

Strategic Expansion and Ecosystem Connectivity

Verisk's strategic initiatives are centered on enhancing its go-to-market approach, elevating client engagement, and investing in innovation at scale. The company's sales teams have achieved record new sales, exceeding ambitious quotas for the second consecutive year, driven by improved client coverage and value-based pricing strategies. This elevated strategic dialogue with clients provides deeper insights into their enterprise needs, fostering stronger renewals and new opportunities.

A key strategic pillar is the expansion of Verisk's ecosystem. The Core Lines Reimagine project, for instance, is driving solid price realization and expanded renewals by delivering new modules, such as an indication center that provides key rating elements two months sooner than traditional processes. Verisk is on track to deliver all 20 planned Reimagine releases in 2025. In catastrophe modeling, the Verisk Synergy Studio, a cloud-native, scalable workflow solution launching in 2026, will provide a flexible, fast, and stable platform for its global suite of catastrophe models at a lower cost of ownership, also serving as an ecosystem hub.

Verisk is also expanding its data contributions and partnerships. It has onboarded 10 new statistical data contributors in 2025 and is building greenfield contributory data sets for anti-fraud (Digital Media Forensics, with 106 contributors including 5 of the top 10 carriers) and excess and surplus lines. In its Property Estimating Solutions (PES) business, Verisk has added 21 new partners in the last year, connecting over 100 industry participants and streamlining operations. The anti-fraud business plans to add up to 20 new partners in 2025.

Recent acquisitions further underscore this strategy. In April 2025, Verisk acquired Simplitium Limited from NASDAQ (NDAQ) for $19.70 million, enhancing its Extreme Events business by providing access to over 300 third-party models. In July 2025, Verisk acquired SuranceBay, LLC for $163.10 million, a leading provider of producer licensing and compliance solutions for the life and annuity industry, which will be integrated into Verisk Life Solutions (FAST business) to streamline insurance distribution. The company also announced a definitive agreement in July 2025 to acquire AccuLynx for $2.35 billion, a leading SaaS platform for residential property contractors with expertise in roofing. AccuLynx is highly additive to Verisk's PES business due to significant customer overlap and complementary functionality, aiming to improve information flow and deliver cost and time savings for carriers and contractors. The estimated total addressable market (TAM) for the roofing sector is approximately $2 billion, with AccuLynx's 2025 revenue around $150 million, indicating substantial penetration opportunity.

Competitive Positioning and Market Dynamics

Verisk operates in a competitive landscape with both direct and indirect rivals. In specialized data analytics, direct competitors include Equifax (EFX), Moody's Corporation (MCO), RELX Group (RELX) (LexisNexis), and Fair Isaac Corporation (FICO). Verisk's competitive differentiation lies in its deep specialization and tailored solutions for the insurance and energy sectors, particularly in predictive modeling and catastrophe risk. While Equifax excels in broad consumer credit data and RELX in legal and risk intelligence, Verisk's proprietary data and AI integration offer a more integrated and specialized approach for complex risk scenarios in its core markets. In the auto insurance sector, Verisk faces competitive pressures from a "large competitor" where it does not have the same scale, leading to occasional challenges. However, Verisk aims to supplement its offerings by tying claims-related data to underwriting data for innovative solutions. In the roofing SaaS market, AccuLynx's specialization in roofing contractor needs differentiates it from broader general contractor service providers like ServiceTitan and JobNimbus.

The broader industry trends are largely favorable for Verisk. The insurance industry returned to profitability in 2024, recording an underwriting gain of $25 billion, the first in four years. Premium growth was high single-digit in 2024, normalizing to mid-single digits in 2025. Historically, Verisk's organic revenue growth has shown minimal differentiation between soft (6.8%) and hard (7.3%) markets, underscoring the resilience of its value proposition. The U.S. pet insurance market, a new area for Verisk with its ISO Pet Insurance Line of Business program, reached nearly $4.75 billion in gross written premiums in 2024, growing 21.4% year-over-year.

Financial Performance and Capital Allocation

Verisk's financial performance in Q3 2025 demonstrated continued strength. Revenues reached $768.30 million, up 5.9% year-over-year, contributing to nine-month revenues of $2,293.90 million, a 6.9% increase over the prior year. Subscription revenues, which constitute 84% of total revenue, grew 8.7% on an OCC basis in Q3 2025, reflecting strong client engagement and value realization. This was partially offset by an 8.8% decline in transactional revenue due to exceptionally low severe weather activity and a reduction in a government contract. Despite these headwinds, adjusted EBITDA grew 8.8% on an OCC basis, with the adjusted EBITDA margin expanding to 55.8% in Q3 2025, driven by revenue growth and cost discipline.

For the nine months ended September 30, 2025, net income was $711.10 million, a 4.8% decrease from the prior year, primarily due to prior-year gains from divested businesses and early debt extinguishment. Similarly, the EBITDA margin for the nine months decreased to 56.2% from 59.3% for the same reasons.

Verisk maintains a strong liquidity position, with cash and cash equivalents totaling $2,107.90 million as of September 30, 2025.

Net cash provided by operating activities increased 36.2% to $403.50 million in Q3 2025 and 23% to $1,092.70 million for the nine months, driven by increased operating profits, timely cash receipts, and lower cash tax payments. The company's capital allocation strategy prioritizes organic investment, M&A, and returning capital to shareholders. Verisk repurchased $100.10 million of common stock in Q3 2025 and $400.20 million year-to-date. As of September 30, 2025, $1,191.50 million remained under its share repurchase authorization. Dividends of $0.45 per share were approved for Q1, Q2, and Q3 2025.

Outlook and Risk Considerations

Verisk's updated 2025 guidance reflects a consolidated revenue range of $3.05 billion to $3.08 billion, adjusted EBITDA of $1.69 billion to $1.72 billion, and adjusted EBITDA margins of 55% to 55.8%. Net interest expense is projected between $165 million and $185 million, reflecting cash earned on bond proceeds. Diluted adjusted EPS is expected to be in the range of $6.80 to $7. This revised guidance explicitly excludes any material financial benefit from the pending AccuLynx acquisition for 2025 due to a delay in FTC approval.

Key assumptions for the outlook include a normalized level of storm activity, though Q4 2025 faces a tough comparison against the elevated storm-related transactional activity from hurricanes Helene and Milton in Q4 2024. Persistent softness in the personal auto business and the impact of a government contract reduction are also factored in. Management remains confident in achieving its long-term OCC revenue growth target of 6% to 8% for 2026 and beyond, citing the underlying strength of its subscription business and ongoing strategic initiatives.

However, several risks warrant investor attention. The delay in FTC approval for AccuLynx introduces uncertainty and postpones anticipated synergies. Verisk is also involved in various legal proceedings, including telematics litigation alleging data sharing without consent, an indemnification claim related to a divested subsidiary, commercial litigation over earn-out targets, and data privacy litigation concerning Daniels Law. The potential liabilities from these matters cannot be reasonably estimated at their early stages. Furthermore, while the core insurance business is resilient, some marketing segments remain sensitive to macroeconomic conditions and discretionary spending pressures.

Conclusion

Verisk Analytics continues to solidify its position as a critical enabler of efficiency and insight within the global insurance industry. Its robust subscription-based model, fueled by proprietary data and an aggressive AI integration strategy, underpins a predictable growth trajectory. The company's commitment to innovation, exemplified by its Core Lines Reimagine program and new AI-powered solutions, consistently delivers tangible value to clients, reinforcing its pricing power and deep strategic relationships. Despite near-term transactional headwinds from atypical weather patterns and competitive pressures in specific auto segments, Verisk's strategic acquisitions and ecosystem expansion initiatives are poised to broaden its market reach and enhance its technological leadership. The ongoing focus on disciplined capital allocation, balancing organic investment with shareholder returns, further strengthens the investment thesis. While regulatory delays and litigation present watch items, Verisk's foundational role, technological prowess, and strategic execution position it for sustained growth and continued value creation for shareholders in an evolving and increasingly complex insurance landscape.