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Verisk Analytics, Inc. (VRSK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 8.6% YoY to $736 million; OCC revenue growth was also 8.6%, with Underwriting +7.0% OCC and Claims +12.7% OCC . Adjusted EBITDA was $398 million (+9.9%), and adjusted EBITDA margin expanded 70 bps YoY to 54.1% .
  • Diluted adjusted EPS increased 15.0% to $1.61; GAAP diluted EPS from continuing operations grew 15.2% to $1.44. 82% of revenue was subscription, growing 11% OCC as mix continued to shift from transactional to subscription .
  • Board raised the quarterly dividend 15% to $0.45 and added a new $1.0B buyback authorization (after a $300M ASR in Q4); $592M remained under the prior authorization at year-end .
  • FY 2025 initial guidance: revenue $3.03–$3.08B (OCC +6–8%), adjusted EBITDA $1.67–$1.72B, margin 55.0–55.8%, adjusted EPS $6.80–$7.10; capex $245–$265M; interest expense $145–$165M; tax rate 23–25% .
  • S&P Global Wall Street consensus (EPS/revenue) for Q4 was unavailable at time of analysis due to data access limits; estimate comparisons not shown (default source would be S&P Global).

What Went Well and What Went Wrong

What Went Well

  • Subscription momentum and price realization: Subscription revenues were 82% of total and grew 11% OCC, driven by value-based pricing tied to Core Lines Reimagined and Extreme Events models (“value‑driven price increases” approach) .
  • Claims and Underwriting strength: Q4 OCC growth accelerated broadly; Claims +12.7% on strong Property Estimating and Anti‑Fraud solutions; Underwriting +7.0% with forms/rules/loss costs and Extreme Events contributing .
  • Capital returns reinforced confidence: Dividend increased 15% to $0.45 and a new $1.0B share repurchase authorization was approved; management returned $355M in Q4 via repurchases and dividends .

Selected quotes:

  • CEO: “Verisk delivered strong fourth quarter results…investing in new innovations and technologies that deliver value to the insurance ecosystem” .
  • CFO: “Verisk delivered 8.6% OCC revenue growth, 13.5% OCC adjusted EBITDA growth, and continued margin expansion, resulting in 15.0% adjusted EPS growth” .

What Went Wrong

  • Transactional revenue headwinds: Q4 transactional revenue declined 1.1% OCC, reflecting continued conversion of formerly transactional contracts to subscription and normalization in InsurTech auto; storm-related transactional benefits did not reach the disclosure threshold .
  • Higher interest expense run-rate: Net interest expense rose to ~$35M in Q4 (annualizing implies a higher 2025 run-rate); guidance embeds $145–$165M interest expense for FY25, up from 2024 .
  • FX variability: Modest FX headwind in Q4 offset the FX tailwind seen in Q3; FX is not forecast or hedged, creating quarterly margin variability .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$716.8 $725.3 $735.6
Revenue Growth (YoY, %)+6.2% +7.0% +8.6%
OCC Revenue Growth (YoY, %)+6.0% +6.8% +8.6%
Diluted EPS – Continuing Ops ($)$2.15 $1.54 $1.44
Diluted Adjusted EPS ($)$1.74 $1.67 $1.61
Adjusted EBITDA ($USD Millions)$397 $401 $398
Adjusted EBITDA Margin (%)55.4% 55.2% 54.1%
Net Cash from Operating Activities ($USD Millions)$211.7 $296.2 $255.4
Free Cash Flow ($USD Millions)$153.9 $240.7 $200.0

Segment revenue and OCC growth:

Segment MetricQ2 2024Q3 2024Q4 2024
Underwriting Revenue ($USD Millions)$508 $507 $512
Underwriting OCC Growth (%)6.0% 6.5% 7.0%
Claims Revenue ($USD Millions)$209 $218 $224
Claims OCC Growth (%)5.8% 7.4% 12.7%

KPIs:

KPIQ2 2024Q3 2024Q4 2024
Subscription Share of Revenue (%)81% 82% 82%
Subscription OCC Growth (%)8.3% 9.1% 11%
Transactional OCC Growth (%)-3.0% -2.5% -1.1%

Notes/Adjustments:

  • Q4 GAAP EPS benefited from nonrecurring items including a $100.6M net gain upon settlement of retained interests related to prior dispositions; Q4 also included a $12.1M loss on sale of AER (Underwriting) .
  • Dividend was $0.39 paid on Dec 31, 2024; new $0.45 approved Feb 19, 2025, payable Mar 31, 2025 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025—$3.03–$3.08 New
Adjusted EBITDA ($USD Billions)FY 2025—$1.67–$1.72 New
Adjusted EBITDA Margin (%)FY 2025—55.0–55.8 New
Diluted Adjusted EPS ($)FY 2025—$6.80–$7.10 New
Fixed-asset D&A ($USD Millions)FY 2025—$250–$270 New
Intangible Amortization ($USD Millions)FY 2025—$65 New
Interest Expense ($USD Millions)FY 2025—$145–$165 New
Effective Tax Rate (%)FY 2025—23–25 New
Capital Expenditures ($USD Millions)FY 2025—$245–$265 New
Dividend per Share (Quarterly)Q1 2025$0.39 $0.45 Raised (+15%)
Share Repurchase AuthorizationAs of Feb 19, 2025$592M remaining +$1.0B new authorization Raised
Revenue ($USD Billions)FY 2024$2.84–$2.90 $2.84–$2.90 Maintained
Adjusted EBITDA ($USD Billions)FY 2024$1.54–$1.60 $1.54–$1.60 Maintained
Adjusted EBITDA Margin (%)FY 202454–55 54–55 Maintained
Diluted Adjusted EPS ($)FY 2024$6.30–$6.60 $6.30–$6.60 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Price realization & subscription growthFocused go-to-market and pricing tied to Core Lines Reimagined drove subscription OCC +8.3% (Q2) and +9.1% (Q3) .Subscription OCC +11%; management emphasized “value-driven” price increases and stronger renewals .Accelerating subscription growth; sustained value-based pricing.
Transactional revenue normalizationDeclined 3% OCC in Q2 on tough comps and conversion to subscription; Q3 declined 2.5% OCC .Declined 1.1% OCC; storm uplift modest; continued conversion; InsurTech attrition noted .Improving trajectory but still a headwind; conversion persists into H1’25.
Extreme Events/storms2024 claims volumes below 2023 record but ~20% above 5-yr average; hurricanes Beryl/Helene/Milton discussed (Q3) .Storm impact similar in magnitude to Ian (Q4’22) but below disclosure threshold; minimal carryover expected into 2025 .Episodic; limited 2025 impact from Helene/Milton.
California wildfires & regulatoryEngaging Western states; wildfire model updates; regulatory backdrop (Q2) .First to submit wildfire model under CA initiative; forward-looking models now allowed for pricing; supports rate adequacy .Regulatory environment improving for model-based pricing; supports long-term adoption.
Generative AI/product innovationIndustry focus on AI and regulatory change (Q2) .AI-enabled Lean Experience for wildfire response; continued ecosystem build in claims .Ongoing responsible AI deployment in claims/workflows.
Contract conversions & renewalsDiscrete contract conversion benefitted subscription; longer-term conversion trend (Q3) .Discrete conversion persists through mid-Q2’25; longer multiyear contract durations evolving .Conversion tailwind in H1’25; gradual extension of contract terms.
Margin trajectory & FXTTM margin 54.3% (Q2); FX tailwind ~60 bps in Q3 .Adjusted margin 54.1%; FX a modest headwind; FY25 margin guidance 55–55.8% .Margins guided higher; FX remains unforecasted volatility.

Management Commentary

  • Strategic priorities and momentum: “We enter 2025 with strong momentum…investing in new innovations and technologies that deliver value to the insurance ecosystem” (CEO) .
  • Financial discipline and capital allocation: “We continue to invest…while returning cash to shareholders…board has approved a 15% increase to our dividend” (CFO) .
  • Subscription value and pricing: “Value-driven price increases…Core Lines Reimagined investments…clients are seeing substantial improvements” (CEO) .
  • Wildfire/regulatory stance: “California…forward-looking models…we were very proud to be the first to submit our wildfire model as a basis for pricing” (CEO) .
  • Interest expense/refi outlook: “Net interest expense was $35M…leverage slightly below low end of targeted range…likely refinance during the year” (CFO) .

Q&A Highlights

  • Pricing realization: Value-based price increases under Core Lines Reimagined and Extreme Events yielded stronger renewals with pricing traction; management expects this to continue in 2025 .
  • Subscription conversions: Discrete contract conversion effect persists through mid-Q2’25; broader conversions (e.g., Anti-Fraud) likely continue into H1’25 .
  • Storm impacts: Q4 storm uplift similar to Ian (Q4’22) but below disclosure thresholds; limited expected impact in 2025 .
  • California wildfires/regulatory: Forward-looking models now allowed; Verisk first to submit wildfire model; supports rate adequacy and availability .
  • Guidance components: FY25 includes share buybacks; higher interest expense from 2024 refi; D&A step-up from projects placed into service .
  • Capex cadence/free cash flow: 2024 capex below prior range due to timing; capex guided up 15% YoY for 2025; confidence in FCF underpins dividend increase .

Estimates Context

  • S&P Global Wall Street consensus for Q4 2024 (EPS and revenue) was unavailable due to data access limits during this session; therefore, explicit beat/miss vs consensus cannot be shown. We default to S&P Global as the source when available.
  • Directionally, results featured strong OCC revenue and adjusted EPS growth, and FY25 guidance points to continued margin expansion (55–55.8%) alongside higher interest expense and normalized tax, which may prompt modest EPS estimate recalibration for 2025 .

Key Takeaways for Investors

  • Subscription engine is accelerating (11% OCC in Q4) with value-based pricing and stronger multiyear renewals—supporting durable revenue visibility into 2025 .
  • Transactional headwinds are easing (‑1.1% OCC) but persist near term due to conversions and auto InsurTech softness; expect carryover into H1’25 before stabilizing .
  • Margin framework is strengthening: 54.1% in Q4 and guided to 55–55.8% for FY25, indicating operating leverage despite FX variability and higher interest expense .
  • Capital returns are a catalyst: Dividend up 15% to $0.45 and a fresh $1.0B buyback authorization on top of $592M remaining—supporting per-share growth and floor for drawdowns .
  • Regulatory tailwinds: California’s acceptance of forward-looking catastrophe models and Verisk’s first submission enhance the moat and monetization potential in Extreme Events .
  • Portfolio discipline: AER divestiture streamlines Underwriting; one-time items (e.g., $100.6M gain) impacted GAAP but adjusted metrics remain robust—focus on non-GAAP trajectory .
  • Trading lens: Near-term narrative favors subscription momentum and guidance uplift; watch transactional normalization, FX swings, and interest expense trajectory around mid‑2025 refi .