2025 Outlook and Potential Headwinds
Q: Is 2025 setting up for an outsized year of growth, or are there headwinds?
A: Elizabeth Mann acknowledged tailwinds such as strong subscription momentum and a continued strong premium environment. However, she identified potential headwinds including the longer cycle of elevated premium growth, carriers focusing on profitability and evaluating their lines of business and overall spend, and the possibility of normalization of attrition, which has been a boost over the last couple of years. Despite these factors, she stated that Verisk sees strong momentum in the business.

Subscription Revenue Growth Drivers
Q: What drove the acceleration of subscription revenue growth in Q3?
A: Elizabeth Mann explained that the accelerating subscription growth is seen across all businesses and isn't due to any one factor. The drivers include focused go-to-market strategies, enhanced client engagement, and strength from product development and innovation. This growth is supported by the tailwind of premium growth, with momentum from new sales, conversions to subscription, upsizing usage, and adding Verisk products.

Bookings Trends and Sales Strategy
Q: How are bookings trending, and what is driving the subscription momentum?
A: Elizabeth Mann stated that bookings are trending well, with subscription growth driven by overall strength, including acquiring new customers and strong sales. Lee Shavel added that sales results have been strong relative to expectations, reflecting changes in the go-to-market strategy such as focusing territories, changing incentives, and higher-level enterprise discussions opening up opportunities to make more value-driven sales at a senior level.

Guidance for 4Q and Full Year
Q: Are you being conservative with the guidance, given the wide range implied for Q4?
A: Elizabeth Mann reaffirmed the 2024 revenue and adjusted EBITDA guidance and indicated that, with one quarter left, they are very much in line with the full-year range. She noted that their intention has always been to provide a full-year estimate rather than quarterly updates.

Impact of Hurricanes and Revenue Mix
Q: How will Hurricanes Helene and Milton affect Q4 results and future tailwinds?
A: Elizabeth Mann mentioned that it's early to quantify the impact of Hurricanes Helene and Milton. Verisk estimates insured losses at $6–$11 billion for Helene and $30–$50 billion for Milton. While combined losses are similar to Hurricane Ian, the flow-through can vary based on factors like the number of assignments and type of peril. She also noted that customers are converting contracts from transactional to subscriptions, which may reduce transactional swings from single storms. The transition to subscription has been a win-win, reflected in subscription growth.

Auto Shopping Trends and Growth Impact
Q: How are auto shopping trends affecting growth, and what is the outlook?
A: Elizabeth Mann acknowledged that this is the first quarter where auto shopping activity turned from a tailwind to a headwind. The headwinds are playing out as expected, and while she couldn't quantify future impacts, she noted that comparisons continue to be challenging on the transactional side of the auto business.

Core Lines Reimagine Progress
Q: Where are you in the Core Lines Reimagine journey, and what impact does it have?
A: Elizabeth Mann stated that they are slightly more than halfway through the Core Lines Reimagine program. They track progress by the number of new insights delivered and customer adoption. New innovations like the Experience Index have been launched for five of six major lines of business, with the sixth to launch next year. The Future of Forms initiative will continue to be part of major updates. The engagement platform at core.verisk.com has seen engagement levels multiple times higher than before. These innovations are driving usage at customers, leading to value for Verisk.

International Business Growth and M&A Plans
Q: What is driving the international business growth, and are there M&A opportunities?
A: Elizabeth Mann highlighted strength in several international businesses, including the life, health, and travel business expanding into new regions. The Opta business in Canada contributed to growth, benefiting from the integration of Verisk data sets. Claims businesses in Germany have also been performing well. She indicated that international expansion is an area where they will continue to look for potential acquisitions.

Extreme Event Solutions Customer Growth
Q: Where are the new Extreme Event Solutions customers coming from, and what's driving interest?
A: Elizabeth Mann noted that of the ten new customers, nine are new to the modeling space entirely. This reflects a broader interest in adding specific modeling information around climate change and its impacts. Growth is seen particularly in segments like excess and surplus lines of insurance and managing general agents, significant growth areas in the industry. An executive added that heightened catastrophe loss activity has led more market participants to seek better understanding and quantification of risks, driving interest in Extreme Event modeling solutions.

GenAI Applications and Discovery Navigator
Q: Can you provide more color on the Discovery Navigator tool and GenAI capabilities?
A: Lee Shavel explained that within claims, they have been deploying Generative AI solutions both internally and externally to help clients with talent augmentation, modernization, and productivity. The Discovery Navigator is an AI-driven automation innovation in the medical data extraction space that helps extract specific data elements, organize and catalog them, and provide executive summaries to case files. They are also innovating in the property estimating space with adjuster co-pilot transcription summaries and loss note summaries. Additionally, Verisk is integrating GenAI into several products to improve efficiency and productivity for clients.

Insurance Industry Trends and Verisk's Role
Q: How is Verisk assessing the industry's focus on profitability amid current changes?
A: Lee Shavel stated that improvements in premium growth and combined ratios reflect continued interest in Verisk's data and analytics to make better risk decisions. Verisk is helping carriers improve internal processes by automating functions and integrating data into workflows. He mentioned the integration of external parties in the insurance ecosystem, such as the whitespace platform in London, to improve efficiency and data quality for underwriters.

Transactional to Subscription Conversion
Q: Will the conversion from transactional to subscription revenue be a notable headwind?
A: Elizabeth Mann explained that the impact of contract conversions will be felt for approximately a year from the second quarter. However, she didn't view it as a headwind overall since it's a shift from transactional to subscription revenue. Lee Shavel added that the adjustment was a specific geographic shift and doesn't impact the longer-term growth opportunity in both transactional and subscription businesses.

Guidance Details and Interest Expense
Q: Can you walk through the moving pieces on guidance, including interest expense and FX?
A: Elizabeth Mann noted that guidance ranges are for the full year. The 60 basis point FX benefit to margins in Q3 was not contemplated in the guidance and is not forecasted for Q4. Interest expense was $32 million this quarter, up from $29 million a year ago. This could be considered a reasonable run rate, though net interest expense may go up over time if interest rates earned on cash balances decline. She confirmed that there is no change in the underlying business relative to prior guidance.