Verisk(VRSK) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Verisk reported strong Q2 2025 results with revenue at $773 million and adjusted EBITDA at $445 million, raising full-year guidance and advancing strategic acquisitions Q2 2025 Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $773M | $717M | +7.8% | | Net Income | $253M | $308M | -17.7% | | Adjusted EBITDA | $445M | $397M | +11.9% | | Diluted EPS | $1.81 | $2.15 | -15.8% | | Diluted Adjusted EPS | $1.88 | $1.74 | +8.0% | - CEO Lee Shavel highlighted the company's evolution from a data analytics specialist to an integrated technology network, reinforced by the strategic acquisitions of SuranceBay and AccuLynx[3] - CFO Elizabeth Mann emphasized strong operating momentum, with 7.9% OCC revenue growth and 9.7% OCC adjusted EBITDA growth, driven by solid operating leverage. The company continues to invest in core operations and strategic acquisitions while returning capital to shareholders[4] - Verisk announced the acquisition of SuranceBay for $163 million and a definitive agreement to acquire AccuLynx for $2.35 billion, significantly expanding its capabilities in the insurance ecosystem[7] Detailed Financial Performance This section details Verisk's Q2 2025 financial performance, analyzing revenue, profitability, earnings per share, and cash flow Revenue Analysis Total revenue increased 7.8% to $773 million in Q2 2025, driven by growth in both Underwriting and Claims segments of the Insurance business Revenue by Segment (in millions) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | Reported Change | OCC Change | | :--- | :--- | :--- | :--- | :--- | | Underwriting | $550 | $508 | 8.3% | 7.7% | | Claims | $223 | $209 | 6.6% | 8.3% | | Total Insurance | $773 | $717 | 7.8% | 7.9% | - Growth in Underwriting revenue was primarily driven by forms, rules, loss cost services, and extreme event solutions[13] - Claims revenue growth was mainly attributed to strong performance in property estimating solutions and anti-fraud solutions[13] Profitability Analysis Net income decreased to $253 million due to prior-year gains, while Adjusted EBITDA grew 11.9% to $445 million, expanding the margin to 57.6% - The 17.7% decrease in quarterly net income was primarily the result of net gains recognized in the prior year period from the sales of healthcare and specialized market businesses and the early extinguishment of debt[11] Adjusted EBITDA Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Reported Change | OCC Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $445 | $397 | 11.9% | 9.7% | | Adjusted EBITDA Margin | 57.6% | 55.4% | +220 bps | N/A | - The 9.7% OCC growth in Adjusted EBITDA was driven by operating leverage on solid revenue growth and effective cost discipline[14] Earnings Per Share (EPS) Diluted GAAP EPS decreased to $1.81 due to prior-year gains, while Diluted Adjusted EPS increased 8.0% to $1.88 from strong operational performance Diluted EPS Comparison | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Diluted GAAP EPS | $1.81 | $2.15 | -15.8% | | Diluted Adjusted EPS | $1.88 | $1.74 | +8.0% | - The decrease in diluted GAAP EPS was primarily due to net gains in the prior-year period from business sales and early debt extinguishment[19] - Diluted adjusted EPS increased 8.0%, reflecting strong operational performance and a lower average share count, partially offset by higher interest and depreciation expenses[19] Cash Flow and Capital Return Net cash from operating activities grew 15.5% to $245 million and free cash flow increased 22.6% to $189 million, alongside continued capital returns Q2 2025 Cash Flow (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $244.5 | $211.7 | +15.5% | | Capital expenditures | ($55.8) | ($57.8) | -3.5% | | Free cash flow | $188.7 | $153.9 | +22.6% | - During Q2, the company completed a $100 million Accelerated Share Repurchase program, buying back 0.3 million shares. $1.3 billion remains authorized for future repurchases[20] - A cash dividend of $0.45 per share was paid on June 30, 2025. The Board approved another $0.45 per share dividend payable on September 30, 2025[20] Business Outlook and Strategic Developments This section outlines Verisk's updated full-year 2025 guidance and details recent strategic acquisitions that expand its market capabilities Full Year 2025 Outlook Verisk raised its full-year 2025 guidance for total revenue to $3.09B - $3.13B and adjusted EBITDA to $1.70B - $1.74B, while narrowing adjusted EPS Updated Full Year 2025 Guidance (in millions, except per share amounts) | Metric | Original Guidance | Updated Guidance | | :--- | :--- | :--- | | Total revenue | $3,030 - $3,080M | $3,090 – $3,130M | | Adjusted EBITDA | $1,670 - $1,720M | $1,700 – $1,740M | | Diluted adjusted EPS | $6.80 – $7.10 | $6.80 – $7.00 | | Interest expense | $145 - $165M | $190 – $210M | Subsequent Events (Acquisitions) Verisk completed the acquisition of SuranceBay for $162.5 million and agreed to acquire AccuLynx for $2.35 billion, expanding its insurance ecosystem capabilities - On July 17, 2025, Verisk acquired SuranceBay, a provider of producer licensing and compliance solutions for the life and annuity industry, for $162.5 million in cash[22] - On July 29, 2025, Verisk agreed to acquire AccuLynx, a leading SaaS business management platform for residential property contractors, for $2.35 billion in cash[23] Appendix This appendix provides supplementary information, including non-GAAP financial measure explanations, unaudited financial statements, and GAAP to non-GAAP reconciliations Non-GAAP Financial Measures Explanation Verisk utilizes non-GAAP measures like Adjusted EBITDA, Adjusted EPS, and OCC growth to provide supplemental operating insights by excluding specific non-recurring and non-cash items - Adjusted EBITDA is used to measure operating performance and is calculated by adjusting GAAP net income for items like depreciation, amortization, interest, taxes, and certain nonrecurring gains or losses[33] - Diluted Adjusted EPS excludes the after-tax effect of acquisition-related costs and nonrecurring items to better represent the after-tax profitability of core results[34] - Organic Constant Currency (OCC) growth rates are presented to assess performance excluding the impacts of foreign currency fluctuations, recent acquisitions, and dispositions[39] Financial Statements (Unaudited) This section presents unaudited Condensed Consolidated Financial Statements, including Balance Sheets, Statements of Operations, and Statements of Cash Flows - The Condensed Consolidated Balance Sheet shows total assets grew to $4,794.9 million as of June 30, 2025, from $4,264.7 million at December 31, 2024[43] - The Condensed Consolidated Statement of Operations for the six months ended June 30, 2025, reports revenues of $1,525.6 million and net income attributable to Verisk of $485.6 million[44] - The Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2025, shows net cash provided by operating activities of $689.2 million[45] Non-GAAP Reconciliations This section provides detailed tabular reconciliations of GAAP to non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow Q2 2025 Net Income to Adjusted EBITDA Reconciliation (in millions) | Line Item | Amount | | :--- | :--- | | Net income | $253.3 | | D&A, Interest, Taxes | +$192.4 | | EBITDA | $445.7 | | Adjustments (e.g., earn-outs) | -$0.9 | | Adjusted EBITDA | $444.8 | Q2 2025 Net Income to Adjusted Net Income Reconciliation (in millions) | Line Item | Amount | | :--- | :--- | | Net income | $253.3 | | Adjustments (e.g., Amortization of intangibles, net of tax) | +$11.1 | | Adjusted net income | $264.4 | - The company states it is not able to provide a reconciliation of projected non-GAAP guidance to the comparable GAAP results due to the high unpredictability of certain excluded items[41]