Verisk at William Blair Conference: Strategic Expansion Insights

On Tuesday, 03 June 2025, Verisk Analytics Inc (NASDAQ:VRSK) presented at the 45th Annual William Blair Growth Stock Conference. Elizabeth Mann, Verisk’s CFO, outlined the company’s strategic position as a leading provider of data and analytics for the insurance industry, highlighting both growth initiatives and challenges. Verisk, a $3 billion revenue company, is focusing on expanding its market presence while maintaining strong financial discipline.

Key Takeaways

• Verisk is a $3 billion revenue company with high retention subscription-based revenue.
• The company targets 6-8% organic revenue growth, driven by pricing and expansion.
• 2025 financial guidance includes revenue just over $3 billion and EPS between $6.80 and $7.10.
• Verisk has achieved a 420 basis point margin expansion from 2021 to 2024.
• The company is reinvesting in core businesses and expanding into life insurance and specialty solutions.

Financial Results

• Revenue:

- Verisk generates $3 billion in revenue, primarily from subscription services.

- The company aims for 6-8% organic growth in constant currency, with 3-4% from pricing.

- 2025 revenue is projected to be just over $3 billion.

• Profitability:

- Current margins are approximately 55%.

- The company achieved a 420 basis point margin expansion between 2021 and 2024.

- 2025 EBITDA margin is forecasted to be between 55% and 55.8%.

- EPS for 2025 is expected to range from $6.80 to $7.10.

• Cash Flow and Capital Allocation:

- Verisk is highly cash-generative, with working capital as a cash source.

- The company focuses on organic investments and strategic M&A in the insurance market.

- Excess capital is returned to shareholders through dividends and share repurchases.

Operational Updates

• Core businesses account for 85% of Verisk’s revenue.
• The company is expanding into life insurance and specialty business solutions, such as the White Space platform.
• Verisk continues to innovate and develop new products, reinvesting in core offerings like Coreline’s Reimagine.

Future Outlook

• Verisk is committed to moderate margin expansion and disciplined capital allocation.
• The company remains optimistic about future growth prospects, supported by its strategic initiatives and strong market position.
• 2025 guidance includes revenue just over $3 billion, EBITDA margins of 55 to 55.8%, and EPS of $6.80 to $7.10.

For a detailed account of the conference call, please refer to the full transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Andrew: With that, very pleased to welcome Verisk CFO, Elizabeth Mann, to the forty fifth Growth Stock Conference. Elizabeth’s gonna give a presentation to the group on the business, and I’ll I’ll pass it to you, Elizabeth. Thank you.

Elizabeth Mann, Verisk CFO, Verisk: Thank you, Andrew. Thanks for having us here, and thank you thank you all so much for coming. We really appreciate your your interest in in Verisk. I will give you a a brief a brief introduction here, an overview of Verisk. I’ll talk about our our core value proposition and our competitive positioning within that, and then I’ll end with an overview of our financial profile, and then we’ll have questions, later afterwards in the in the breakout room.

So if I can start just with a brief overview here, Verisk is a $3,000,000,000 revenue company. We are the leading provider of data and analytics to the insurance industry. You can see our revenues are primarily coming on subscription basis with very high retention revenue rates. And we break our revenues. We we give you a subsegment disclosure on how our revenues perform in the underwriting segment of the insurance industry versus the claims subsegment.

And then our business is mainly domestic with some strong international businesses contributing to it. In terms of the industry, the insurance industry, our historical roots go back to the nineteen seventies, and we are primarily in the property and casualty segment of the insurance industry. You can see here that we cover, many most, in fact, basically every every aspect of the property and casualty insurance industry. We have more recently expanded into the life insurance space, so we also have some coverage in the life insurance industry. And what we do for them, so we cover we we actually go to business in go to market in many different businesses.

We have a number of different products through which we serve the insurance industry. So even though we are all now focused on the insurance end market, we have a fairly diversified product and solution set for that for that customer base. I mentioned so let let me give you a little bit more, more background, which give which helps understand, the the history of the business and therefore kind of the core value proposition of the business. So within within this pie chart, about 40% of our revenues come through the forms, rules, and loss cost business on the underwriting side and the antifraud business on the claims side. Those two businesses go back to the history of Verisk, which was created in the nineteen seventies.

It was called the insurance services office for The US property and casualty insurance industry. And they decided because of the fragmentation of the market and because of the highly complex regulatory environment in The US P and C industry that they needed a consortium to share data and share some of the workflows. And so just to give you a bit more color on that, the P and C insurance industry is regulated not once at the federal level, but in each of the 50 states, across each of the different lines of businesses. And every carrier who wants to underwrite insurance in a certain business needs to file their policy forms and their pricing algorithms with the regulator in that state for that line of business. In addition, in order to estimate pricing and costs, they they want to understand what’s their actuarial expected loss cost in underwriting a new policy.

And in a very fragmented market, no one carrier has enough data to have what they feel is a sufficiently granular view of the potential loss cost. And so in the seventies, they created this consortium where they would share loss information with each other, they would share and manage the policy forms and the policy language, and that that consortium was called the Insurance Services Office. On the claims side, they created the anti fraud business, which is the single biggest predictor of a fraud in claims in the in the insurance industry is the past claims history of that filer. So they created a contributory database, where they would each contribute the claims so that when you receive a new claim, you can check the database for past the past loss experience of, of that claimer. So those two businesses together go back to the seventies were and are still maintained and continued and are still built on that contributory dataset from across The US P and C insurance industry.

Over time, historically, a couple of things happened. Number one, due to an antitrust case in the nineteen nineties, it was determined that the insurance industry could not own this consortium that could be anti competitive in the insurance industry, and so it was spun out as a as a separate business, which was the history, the start of Verisk. And then over time, we’ve grown some organically, some through acquisitions to create other great businesses that serve The US P and C insurance industry. Industry. So that that’s been our that’s been our history.

We went public in 2009 and have been building and and serving the insurance industry ever since, and we’ll talk a lot about how the business has changed since the nineteen seventies. Because of that historical presence and that the the value proposition that we create for the carriers and for our customers, we do have a very strong penetration in the industry. We say that of the top 100 P and C carriers in The US, One Hundred of them are customers of Verisk. So we have a deep and trusted relationship with the industry which we can build on by creating more data and analytics for them. That presence and that historical relationship of trust with the industry has given us a great deal of consistency.

We’ve said that our our medium term revenue growth targets are six to 8% on an organic constant currency basis, and you can see historically, we have been in that range just about every every year since we went public in 02/2009. You can see the the exceptions to that. The only exceptions on the downside were in 2009 and 2020 in the great financial crisis and in COVID respectively, which are years in which we are pretty proud even though it was below our range. We are proud to have delivered 55% revenue growth in those years in that in that context. Here, we just we wanted to highlight the scale of The US insurance industry in which we play.

We we also have some presence internationally that we’ll talk about. But even just in The US, it is nearly a trillion dollars in annual premium spent. The, you know, the premiums the premiums in the insurance industry probably grow historically on average about mid single digits. It’s, it’s growing a bit faster right now. But I would highlight the the technology spend in the insurance industry is growing faster than that because the industry acknowledges has come around to needing a significant amount of investment in their products, in their technology stack, to be able to drive more efficiency and better use data and analytics to underwrite underwrite the right risk and price it price it accordingly.

So there’s quite a bit of investment going on in the insurance industry. In terms of our in terms of our presence and our opportunity, so the Verisk revenues represent we take a look at it as a as a fraction of premium in the industry, so we are 30 basis points relative to the overall industry premium spent. We are 40 basis points as a as a proportion of the overall industry OpEx. So we think that leaves us significant room to grow within the industry to help them to to help take advantage of the secular opportunity for the insurance industry to continue to innovate and modernize and and digitize. We like to think of this as our flywheel for overall industry growth.

So we have a good presence and a position of trusted relationships within the insurance industry. That gives us that gives us an ability a a stable, consistent revenue growth, which gives us ability to invest and to be able to plan long term for multiyear investments, we continue to do, modernizing the products, which then increases the value proposition for the customers and sort of starts the starts the flywheel over again. So let me move with that introduction to Verisk and and hopefully a level setting of who we are and and what we do. Let me talk a little bit about our our competitive positioning, and what makes us unique and special. So here, look, we highlight some of our competitive advantages, but what I would really what I would really lean on here is our relationships with the industry, the the trust that that creates, and then, of course, as the outcome of that, the proprietary data on which we are built.

So again, we’ve we’ve had this long term relationship with the industry. They continue to contribute to us their loss cost information and their the the claims information in that anti fraud database, off of which our most valuable products are built. But more importantly than that, it speaks to the ongoing dialogue and relationship we have with the customers, and we can talk to them about their strategic direction and the products that we can build to help them continue to innovate and move along that chain. We have three key priorities: to continue to drive consistent growth, to deliver operating efficiency and ongoing margin expansion, and to generate strong returns on invested capital via disciplined capital allocation. So let me take a minute on each of those, a minute and a slide or two on each of those priorities.

In terms of driving, continuing to drive strong revenue growth, This is another way of looking at our business. We talk about our core businesses and then some of the more recent growth areas that we’ve been moving into. So our core businesses, I I talked about this a little bit. I talked about the 40% or so of our revenues that are built on that proprietary, that contributory dataset. Also included in that dark blue section of our core businesses are some very strong businesses that over time we have acquired or built up organically, integrating with those core businesses.

And so just to give a couple examples on that, we have what we call our extreme event solutions business there on the in the middle. That is a catastrophe modeling business that helps insurers and reinsurers assess and and price the risk for potential extreme events such as US hurricanes, or wildfires, but it also includes a a panoply of different potential risks and perils across the world, such as Japanese tsunami or earthquakes in various different regions. We also have in our claim solutions, I talked about that core anti fraud business. We also have a property estimating solutions business, which enables the carriers, the claims adjusters, and the contractors actually doing the work to manage the workflow to assess the pricing for property repair, which is going to be covered by carriers. So it will assess the pricing based on sort of current up to date granularly tracked by different regions in The US, and it will help them manage that workflow as well.

So that’s the property estimating solutions business. And then we also on the underwriting side, we provide a range of different data and analytics supporting that forms rules and loss cost business. Supporting an underwriter to make an actionable decision on a on a risk, a policy that they’re thinking of underwriting. Those are the that’s the strength of our core businesses, and those represent about 85% of our of our revenue today. Outside of those, more recently in recent years, we’ve we’ve expanded into a number of different areas which are new TAMs for us and and potentially growth and acceleration opportunities for us.

We’ve entered first and I mentioned this before, we entered in the life insurance business. Now that is not these these businesses on the outer ring are generally not contributory data models like our core P and C insurance business. They tend to be more software like businesses new markets and new areas within the insurance industry. So for example, the life insurance business is a SaaS platform, it is a policy administration workflow system for life insurance carriers. We acquired this in 2019, we saw a great SaaS platform with very much a right to win, but it was having very long sales cycles with life insurance carriers who were reluctant to trust a mission critical software system to a small venture backed player, so they were growing mid single digits when we acquired them.

We significantly accelerated the growth rate because of the Verisk name and credibility in the insurance industry, even though we didn’t play in life. Something like 40% of our P and C customers also underwrite some life business, so we had an immediate customer validation point there. Similarly, we’ve entered into some new end markets in the marketing space, in the specialty business solutions, think of specialty insurance as the insurance risks that are transacted on the Lloyd’s syndicate in London, and we have a business that reports inside the extreme events business that does resilience and sustainability metrics for a number of risk assessment tools. So those are our core and our growth businesses. On innovation, I would say we have a strong track record of delivering innovation and new products.

It is sort of systematic at Verisk. We think about it in in a number of different categories and we have different different groups. In some cases, it lives within the business and the people that are closest to the products and closest to the end markets and customers work on the innovation. In other cases, we have a business development group that is more market focused, so we take each of those. Maybe I’ll just we have some examples listed there at the bottom.

I’m not going to go through each one, but I will highlight Coreline’s Reimagine and and White Space. Those are good examples of driving growth. The first is in the core business, and then the second is more on the on that kind of new and growth, growth expanding area. So in the core lines, reimagine, this is the reimagining, the reinvestment in our core product. I said that product went back to the seventies.

It has evolved a lot since the seventies. We started off by mailing paper circulars with the lost cost tables to all of our customers. We have not done that for a very long time. But for but for much of the content, it is still primarily accessed via PDFs downloaded from a website. That’s not the twenty twenty’s way to use and interact with and and incorporate data and analytics.

So as we’ve been reinvesting in that project, we’ve been revolutionizing the way that our customers are interacting with our core content in ways that they have told us both directly and that we hear indirectly through market checks is driving a great deal of efficiency and better usage of our core content. So re rejuvenating the value proposition even of our core businesses that go back to the seventies. On a much on a much newer front, the white space platform, I talked about the fact that we do business supporting the specialty business the specialty insurance business and the Lloyd’s syndicate. The white space platform is a is a transaction platform. It is a network business where the brokers who are syndicating a the risk in an insurance port, policy, and the carriers who are signing on to different tranches of risk in that policy can exchange information about the policy, exchange information about the risk.

The carriers can assess in a true data first way the characteristics of that risk and how it fits in with the rest of their portfolio, and they can come together. The carriers can quote a price on that risk and the brokers can transact, and ultimately both parties can can bind the risk. So that is the start of a network business. It has been adopted by Marsh, which is the leading broker in the world, and they are putting through a significant portion of policy volume on the platform. So that’s one of our growth areas which sort of came from our innovation process.

So we pause there, that was our that was the focus on driving consistent growth. The second of my three priorities was on delivering margin expansion. Our margins are about 55% today. So, you know, so we have we our business has operating leverage. It starts with high margins.

There are still opportunities for efficiency and for to drive operating leverage in the business. Now I will say we just completed a margin expansion target that we we quoted a target in 2021 that we would expand margins by 300 to 500 basis points by 2024. We’ve just finished and delivered on that commitment. We, we expanded margins by 420 basis points. And I’ve been very open about the fact that that rate of margin expansion trajectory expanding well over a hundred basis points a year is probably not where we will continue for the foreseeable future.

We do still have opportunities for efficiency, but we also have quite a lot of reinvestment opportunity in the core business. And so we will we will continue to deliver margin expansion, but at a slightly more moderate pace than we have over those past three years in order to continue building that sustainability of of future growth. On a capital allocation basis, we follow our returns on invested capital framework. We are focused on maximizing our our returns on invested capital, and our priorities fall roughly roughly in this order. So we we prioritize organic investment in the business.

You’ll notice if you look at our financials, our our r and d line is not that meaningful. That’s because so many of our businesses are software like businesses and incorporate the benefits of our existing products, which means that most of our investment spend is classified as CapEx, which is almost all internally developed software. So we have we have a significant amount of reinvestment in the business. We measure our returns on that organic internal investment, it has been and continues to drive very strong returns on that invested capital. We will prioritize first that organic investment in the business, We will look strategically at M and A.

We are, we have a binary filter on M and A. We are focused solely on businesses that serve the insurance end market vertical. We had historically, we had gone into some other end markets and divested those businesses in order to focus solely on the insurance industry. From a balance sheet perspective, we have a strong balance sheet, we will maintain that. And then finally, where we have excess opportunity in capital, we will continue to return capital to shareholders.

I’ll come to that in a little bit more detail when I talk about the financials. So financially, I’ve given I’ve given a bunch of data points already, so I’ll I’ll just go through this a bit a bit more quickly. But, you know, from a historical perspective, this is the last five years. We’ve grown revenues by approximately 7%. That’s on an organic constant currency basis.

Earlier in my historical chart, you’ll see that m and a added probably on average a little more than a point of revenue growth, but we we grade ourselves on an organic basis. And then on an EBITDA growth basis, also on an organic constant currency basis, have nine and a half percent growth on the on the EBITDA side. We sometimes think about our building blocks our our revenue growth in terms of these building blocks. So six to 8% is what we’ve achieved historically. It’s also been our medium term targets that we quoted at the twenty twenty three investor day.

So those targets were through 2025, and we’ve continued to deliver against this. Of that six to 8% growth, we say about half of it should come from pricing growth, so about three to 4% growth from pricing. I’ve said that in in ’23 and ’24 due to a variety of strengths, our pricing growth has been a bit above the historical average. On top of that pricing growth, we also have the opportunity to cross sell and upsell to our existing customers, and we have some brand new initiatives like in the growth areas that I highlighted before. Each of those two vectors should contribute about one and a half to two percentage points each.

We do have some new customer opportunities, that’s that 50 to a 50 basis points. But given our high penetration in The US p and c industry, for a a brand new customer is probably coming either, from one of our new areas like life insurance that we talked about, or it may also be coming within the within the insurance industry. There are sometimes periodic liquidations and and firms that go out of business, and then there can be new capital formations of new new companies forming in a space. So those those are very often in our new customer bucket. And then finally, we have this headwind.

We call it here consolidation, but it can also be traditional attrition. So when there are mergers in the insurance industry, that has been a historically been a bit of a headwind to growth for us. When there is a carrier who may stop writing a certain line of business in a certain state and pull back in certain areas, that can be a headwind for us. And so that’s that’s this headwind. It is not, you know, never like to see it happen, but it is not a shock to the system, it’s very much built in and familiar as part of the growth algorithm, and it’s something we’ve been experiencing all along as we’ve built, as we’ve historically delivered that six to 8% revenue growth.

From a margin expansion standpoint, this is a little more specific. I I referenced that 420 basis points over three years that this is it. As I said, though though the trajectory of expansion may slow, as I said, we do continue to see further efficiency opportunities. We will always strive to be as efficient as possible in our core business and use technology and automation to get us there and continue to do so. And we may redeploy some of that efficiencies in in investment for for future growth.

From a capital return standpoint, we are fortunate to have a very cash generative business. I touched before on return of capital to shareholders, but this this quantifies it for you. We have been steadily returning capital to investors, in the form of the dividend. We initiated that back in 2019 and have grown at about 10 CAGR since then. Actually, more more acceleration in the last couple years as we have, had the full cash flow generation opportunity of the insurance focused business.

On the share repurchase side, maybe just some comments to contextualize the numbers there, particularly on the free the free cash flow to measure it. So I I wanna remember I I want you to remember that, I said that we had some divestitures, so we sold some businesses in 2021 and 2022. That is why it is those divestitures, the free cash flow number is going down. You can see we have reaccelerated and and even having divested some businesses last year, we delivered record cash flow above above anything we had even even when owning those businesses. And then the other observation on those divestitures when we sold businesses, we mainly took the proceeds and returned them share to shareholders via those share repurchases.

That is why those numbers are so large in ’22 and ’23. We are now back at a more steady state level, but we still have an ongoing and continuous commitment to return capital that we don’t need and that we don’t see value creating. Finally, on the balance sheet, we are investment grade. We are b double a one at Moody’s and triple b at S and P. Our target is two to three times debt to EBITDA.

We are at two times right now. And, you know, with EBITDA growth, we continue to see balance sheet capacity to to deliver, you know, to be used to support the business. I mentioned we have a very free cash flow generative business, working capital for us is typically a source of cash, as in our primarily subscription business, we are paid typically upfront for our contracts. So we don’t anticipate any issues in maintaining this strong balance sheet. This is our guidance for 2025.

We have been publicly giving guidance since 2023 and delivering on that. Our revenue revenue number is just over 3,000,000,000, corresponding to six to 8% organic constant currency growth. EBITDA margins of 55 to 55.8%, and EPS, of six eighty to seven ten. That is slightly lower. Our long term our medium term EPS growth goal is double digits.

You can see for this calendar year, it is just a bit behind that because we had some onetime tax, lower tax rate in 2024, elevating that base. We also have some headwinds from higher interest costs on our balance sheet due to refinancings and a bit higher D and A. But on a two year basis, that is still very much in the in the double digit EPS growth rate range. I won’t comment on the on the other line items there. So I’ll just I’ll just wrap up by saying in in conclusion, we have a long track record of delivering on the consistent, and predictable growth profile.

We’re commit we’re committed to continue margin expansion at a moderate level, slightly slightly less fast than had been for a couple years, but still margin expansion. We are we will maintain our disciplined capital allocation, and so we’re excited about the growth prospects ahead. Thanks a bunch.

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