Judson Lindley

Judson Lindley asked whether Verisk's most sophisticated clients, in terms of AI adoption, are using more or less of Verisk's data, and why; and sought clarification on the Q1 revenue guide (sequential low single-digit % down) on an OCC year-over-year basis.

Answer

CEO Lee Shavel explained that AI adoption fundamentally relies on Verisk's underlying, industry-wide, and efficiently gathered datasets, which are becoming even more valuable in an AI context to improve productivity in underwriting, claims, and risk management. He sees this as an opportunity to expand datasets in a more connected environment. CFO Elizabeth Mann stated that specific Q1 OCC revenue growth isn't provided but noted that the quarter faces headwinds from temporary factors, tough subscription comps, and the Verisk Marketing Solutions divestiture, making it the trough for growth, with improvement expected throughout 2026.

Judson Lindley asked whether Verisk's most sophisticated clients are using more or less of Verisk's data today with the adoption of AI, and why. He also requested clarification on the organic constant currency basis year-over-year for the first quarter revenue guide, given the sequential decline.

Answer

Lee Shavel, President and CEO of Verisk Analytics, explained that AI adoption enhances the value of Verisk's underlying datasets, which are efficiently gathered by a trusted third party and easily integrated. He believes AI presents an incremental opportunity to use these datasets more effectively, potentially expanding them, citing new datasets in the excess and surplus market. Elizabeth Mann, CFO, stated that specific Q1 OCC revenue growth isn't provided but noted that the Q1 sequential decline is due to the VMS divestiture, continuing temporary headwinds from Q4, and tough comps on the subscription side. She anticipates Q1 will be the trough for growth, with improvement throughout 2026.

Judson Lindley asked for a breakdown of the Q1 revenue delta between same-day constant currency and reported revenue growth, specifically quantifying the impact from FX and business days. He also asked about any acquired revenue in Q1 and requested the same three components for the Q2 guidance.

Answer

Jenn Ryu, CFO, clarified that the Q1 revenue delta was primarily due to business day impact, with FX contributing approximately one-third. She stated that inorganic revenue from acquisitions in Q1 was minimal, as Reference Point was acquired a month into Q1 last year. For Q2, she noted that the top end of the guidance range represents a 16% decline on a same-day constant currency basis.

Judson Lindley asked for a breakdown of the delta between same-day constant currency revenue decline and reported revenue growth for the quarter, specifically quantifying the impact of FX and business days. He also inquired about any acquired revenue in the quarter and for the second quarter guidance.

Answer

Jenn Ryu (CFO, RGP) clarified that the majority of the delta was due to business day impact, with FX contributing approximately one-third of that. She stated that the inorganic revenue piece in Q1 was minimal year-over-year, given the Reference Point acquisition occurred a month into Q1 last year. For the Q2 guidance, Ms. Ryu noted a 16% decline on a same-day constant currency basis at the top end of the range.

Judson Lindley, on behalf of Andrew Steinerman at J.P. Morgan, requested a bridge from the Q1 revenue guidance to an organic constant currency growth rate and asked for the M&A and FX impacts in the reported Q4 results.

Answer

CFO Jenn Ryu clarified that the high end of the Q1 revenue guidance ($120M) implies a 14% year-over-year decline on a same-day basis, with insignificant FX impact and a mostly organic comparison due to the timing of the ReferencePoint acquisition. For Q4, she stated that revenue was down 11% year-over-year on a same-day, constant-currency basis.

Judson Lindley from J.P. Morgan asked for details on the drivers of the year-over-year gross margin compression and the spread between tuition and wage increases. He also inquired if the weakness in private pay enrollment relative to subsidy enrollment still holds true.

Answer

CFO Tony Amandy stated that the 50-100 basis point spread between tuition and wage increases is being maintained. He attributed the gross margin pressure primarily to the decline in occupancy, which impacts leverage on labor and rent. CEO Paul Thompson added that while subsidy enrollment growth has softened slightly, it continues to be strong, supported by state budgets.