Verisk Analytics, Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion should be read in conjunction with our historical financial statements and the related notes included in our annual report on Form 10-K ("2025 10-K") dated and filed with the Securities and Exchange Commission on February 18, 2026. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in or implied by any of the forward-looking statements as a result of various factors, including but not limited to those listed under "Risk Factors" and "Special Note Regarding Forward-Looking Statements" in our 2025 10-K and those listed under Item 1A in Part II of this quarterly report on Form 10-Q.

We are a leading data analytics provider serving clients in the insurance markets. Using advanced technologies to collect and analyze billions of records, we draw on unique data assets and deep domain expertise to provide innovations that may be integrated into client workflows. We offer predictive analytics and decision support solutions to clients in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, and many other fields. In the U.S., and around the world, we help clients protect people, property, and financial assets.

Our clients use our solutions to make better decisions about risk and opportunities with greater efficiency and discipline. We refer to these products and services as “solutions” due to the integration among our services and the flexibility that enables our clients to purchase components or the comprehensive package. These solutions take various forms, including data, statistical models, or tailored analytics, all designed to allow our clients to make more logical decisions. We believe our solutions for analyzing risk positively impact our clients’ revenues and help them better manage their costs.

Executive Summary

Key Performance Metrics

Revenue growth. We use year-over-year revenue growth as a key performance metric. We assess revenue growth based on our ability to generate increased revenue through increased sales to existing customers, sales to new customers, sales of new or expanded solutions to existing and new customers, and strategic acquisitions of new businesses.

We use year-over-year EBITDA growth as metrics to measure our performance. EBITDA and EBITDA margin are non-GAAP financial measures. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. We calculate EBITDA margin as EBITDA divided by revenues. The respective nearest applicable GAAP financial measures are net income and net income margin. Although EBITDA is a non-GAAP financial measure, EBITDA is frequently used by securities analysts, lenders, and others in their evaluation of companies; EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for an analysis of our operating income, net income, or cash flow from operating activities reported under GAAP. Management uses EBITDA and EBITDA margin in conjunction with traditional GAAP operating performance measures as part of its overall assessment company performance. We believe these measures are useful and meaningful because they help us allocate resources, make business decisions, allow for greater transparency regarding our operating performance, and facilitate period-to-period comparisons. Some of these limitations involved in the use of EBITDA are:

• EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments.
• EBITDA does not reflect changes in, or cash requirements for, our working capital needs.
• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future and EBITDA does not reflect any cash requirements for such replacements.
• Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

EBITDA growth. We use EBITDA growth as a measure of our ability to balance the size of revenue growth with cost management and investing for future growth. EBITDA growth allows for greater transparency regarding our operating performance and facilitate period-to-period comparison.

EBITDA margin. We use EBITDA margin as a performance measure to assess segment performance and scalability of our business. We assess EBITDA margin based on our ability to increase revenues while controlling expense growth.

Revenues

We earn revenues through agreements for hosted subscriptions, advisory/consulting services, and for transactional solutions, recurring and non-recurring. Subscriptions for our solutions are generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one year and automatically renewed each year. As a result, the timing of our cash flows generally precedes our recognition of revenues and income and our cash flow from operations tends to be higher in the first quarter as we receive subscription payments. Examples of these arrangements include subscriptions that allow our customers to access our standardized coverage language, our claims fraud database, or our actuarial services throughout the subscription period. In general, we experience minimal revenue seasonality within the business. For the three months ended March 31, 2026 and 2025, approximately 84% and 83% of our insurance revenues were derived from hosted subscriptions through agreements (generally one to five years) for our solutions, respectively.

We also provide advisory/consulting services, which help our customers get more value out of our analytics and their subscriptions. In addition, certain of our solutions are paid for by our customers on a transactional basis, recurring and non-recurring. For example, we have solutions that allow our customers to access property-specific rating and underwriting information to price a policy on a commercial building, or compare a property & casualty insurance or a workers' compensation claim with information in our databases, or use our repair cost estimation solutions on a case-by-case basis. For the three months ended March 31, 2026 and 2025, approximately 16% and 17% of our insurance revenues were derived from providing transactional and advisory/consulting solutions, respectively.

Operating Costs and Expenses

Personnel expenses are the major component of both our cost of revenues and selling, general and administrative expenses. Personnel expenses, which represented approximately 57% and 56% of our total operating expenses (excluding gains/losses related to dispositions) for the three months ended March 31, 2026 and 2025, respectively, include salaries, benefits, incentive compensation, equity compensation costs, sales commissions, employment taxes, recruiting costs, and outsourced temporary agency costs.

We assign personnel expenses between two categories, cost of revenues and selling, general and administrative expense, based on the actual costs associated with each employee. We categorize employees who maintain our solutions as cost of revenues, and all other personnel, including executive managers, salespeople, marketing, business development, finance, legal, human resources, and administrative services, as selling, general and administrative expenses. A significant portion of our other operating costs, such as facilities and communications, is also either captured within cost of revenues or selling, general and administrative expenses based on the nature of the work being performed.

While we expect to grow our headcount over time to take advantage of our market opportunities, we believe that the economies of scale in our operating model will allow us to grow our personnel expenses at a lower rate than revenues. Historically, our EBITDA margin has improved because we have been able to increase revenues without a proportionate corresponding increase in expenses. However, part of our corporate strategy is to invest in new solutions and new businesses, which may offset margin expansion.

Cost of Revenues. Our cost of revenues consists primarily of personnel expenses. Cost of revenues also includes the expenses associated with the acquisition, disposition and verification of data, the maintenance of our existing solutions, and the development and enhancement of our next-generation solutions. Our cost of revenues excludes depreciation and amortization.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses consist primarily of personnel costs. A portion of the other costs such as facilities, insurance, and communications are also allocated to selling, general and administrative expenses based on the nature of the work being performed by the employee. Our selling, general and administrative expenses exclude depreciation and amortization.

Condensed Consolidated Results of Operations

(in millions, except for share and per share data)

(1) EBITDA is a financial measure that management uses to evaluate the performance of our business. "EBITDA" is defined as net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. Although EBITDA is a non-GAAP financial measure, EBITDA is frequently used by securities analysts, lenders, and others in their evaluation of companies. Management uses EBITDA in conjunction with GAAP operating performance measures as part of its overall assessment of company performance. EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for an analysis of our operating income, net income, or cash flows from operating activities reported under GAAP. Some of these limitations are:

• EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
• EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
• Although depreciation and amortization are noncash charges, the assets being depreciated and amortized often will have to be replaced in the future and EBITDA does not reflect any cash requirements for such replacements; and
• Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

Consolidated Results of Operations

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Revenues

Revenues were $782.6 million for the three months ended March 31, 2026, compared to $753.0 million for the three months ended March 31, 2025, an increase of $29.6 million or 3.9%. Our underwriting revenue increased $20.1 million or 3.8%. Our claims revenue increased $9.5 million or 4.3%.

Our revenue by category for the periods presented is set forth below:

(in millions)

Our recent acquisitions (Simplitium and SuranceBay within the underwriting category of the Insurance segment) and disposition (Verisk Marketing Solutions ("VMS") within the underwriting category of our Insurance segment) resulted in a net decrease in revenue of $10.9 million, while the remaining Insurance revenues increased $40.5 million or 5.5%. Our underwriting revenue increased $31.0 million or 6.0%, primarily due to primarily due to an annual increase in prices derived from continued enhancements to the models and content of the solutions within our forms, rules and loss cost services, as well as selling expanded solutions to new and existing customers within catastrophe and risk solutions, specialty business solutions and life solutions. Our claims revenue increased $9.5 million or 4.3%, primarily due to annual price increases in anti-fraud analytics and increased sales in casualty solutions.

Cost of Revenues

Cost of revenues was $236.6 million for the three months ended March 31, 2026 compared to $230.8 million for the three months ended March 31, 2025, an increase of $5.8 million or 2.5%. Our recent acquisitions and disposition accounted for a net decrease of $5.3 million in cost of revenues. The remaining increase of $11.1 million or 5.0% was primarily due to increases in salaries and employee benefits, information technology and data expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $109.5 million for the three months ended March 31, 2026 compared to $108.9 million for the three months ended March 31, 2025, an increase of $0.6 million or 0.6%. Our recent acquisitions and disposition accounted for a net decrease of $2.7 million in selling, general, and administrative expenses. The remaining increase of $3.3 million or 3.3% was primarily due to higher salaries and employee benefit expenses, partially offset by reductions in professional consulting fees.

Depreciation and Amortization of Fixed Assets

Depreciation and amortization of fixed assets were $69.9 million for the three months ended March 31, 2026 compared to $67.4 million for the three months ended March 31, 2025, an increase of $2.5 million or 3.7%. The increase was primarily due to internally developed software projects that were completed and placed into service.

Amortization of Intangible Assets

Amortization of intangible assets was $14.4 million for the three months ended March 31, 2026 and $15.8 million for the three months ended March 31, 2025, a decrease of $1.4 million or 8.9%. The decrease was primarily due to the disposition of VMS, partially offset by a $2.2 million increase due to our 2025 acquisitions.

Investment (Loss) Gain

Investment loss was $0.5 million for the three months ended March 31, 2026 compared to a gain of $2.6 million for the three months ended March 31, 2025, a change of $3.1 million. The loss was primarily due to the impact of foreign currencies.

Interest Expense, net

Interest expense, net was $43.2 million for the three months ended March 31, 2026 compared to $36.3 million for the three months ended March 31, 2025, an increase of $6.9 million or 19.0%. The increase was primarily driven by higher interest expense related to the issuance of our 2031 and 2036 Senior Notes in February 2026, as well as the accelerated interest payments associated with the special mandatory redemption of the 4.500% 2030 Senior Notes and 5.125% 2036 Senior Notes, partially offset by higher interest income.

Provision for Income Taxes

The provision for income taxes was $74.3 million and the effective tax rate was 24.1% for the three months ended March 31, 2026, compared to $64.1 million and 21.6% for the three months ended March 31, 2025, respectively. The increase in the effective tax rate was primarily due to lower tax benefits from equity compensation in the current period versus the prior period. The difference between statutory tax rates and our effective tax rate is primarily due to state and local taxes, partially offset by tax benefits attributable to equity compensation.

Net Income Margin

Net income was $234.2 million for the three months ended March 31, 2026 compared to $232.3 million for the three months ended March 31, 2025, an increase of $1.9 million or 0.8%. The net income margin was 29.9% for the three months ended March 31, 2026 compared to 30.8% for the three months ended March 31, 2025. The decrease in net income margin was primarily driven by the increases in our effective tax rate and net interest expense, discussed above.

EBITDA Margin [1]

EBITDA was $436.0 million for the three months ended March 31, 2026 compared to $415.9 million for the three months ended March 31, 2025. The EBITDA margin for our consolidated results was 55.7% for the three months ended March 31, 2026 compared to 55.2% for the three months ended March 31, 2025. The increase in EBITDA margin was mainly driven by revenue growth and cost discipline.

[1] Note: Consolidated EBITDA margin, a non-GAAP measure, is calculated as a percentage of consolidated revenue. A reconciliation from net income to EBITDA is presented on page 29.

Liquidity and Capital Resources

As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents and available-for-sale securities totaling $525.2 million and $2,178.9 million, respectively. We maintain our cash and cash equivalents in higher credit quality financial institutions in order to limit the amount of credit exposure. As of March 31, 2026 and December 31, 2025, a vast majority of our domestic cash and cash equivalents is with TD Bank, N.A. and JPMorgan Chase N.A.. Subscriptions for our solutions are billed and generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one year. Subscriptions are automatically renewed at the beginning of each calendar year. We have historically generated significant cash flows from operations. As a result of this factor, as well as the availability of funds under our Syndicated Revolving Credit Facility, we expect that we will have sufficient cash to meet our working capital and capital expenditure needs and to fuel our future growth plans.

We have historically managed the business with a working capital deficit due to the fact that, as described above, we offer our solutions and services primarily through annual subscriptions or long-term contracts, which are generally prepaid quarterly or annually in advance of the services being rendered. When cash is received for prepayment of invoices, we record an asset (cash and cash equivalents) on our balance sheet with the offset recorded as a current liability (deferred revenues). This current liability is deferred revenue that does not require a direct cash outflow since our customers have prepaid and are obligated to purchase the services. In most businesses, growth in revenue typically leads to an increase in the accounts receivable balance causing a use of cash as a company grows. Unlike these businesses, our cash position is favorably affected by revenue growth, which results in a source of cash due to our customers prepaying for most of our services.

We have also historically used a portion of our cash for repurchases of our common stock from our stockholders. During the three months ended March 31, 2026 and 2025, we repurchased $1,626.9 million (inclusive of $225.1 million in treasury stock not yet settled) and $200.1 million (inclusive of $30.0 million in treasury stock then not yet settled), respectively, of our common stock. The repurchase of our common stock was funded using cash from operations, and proceeds from our Syndicated Revolving Credit Facility and Term Loan Facility, and cash from operations. For the three months ended March 31, 2026 and 2025, we also paid dividends of $65.5 million and $63.0 million, respectively.

Financing and Financing Capacity

We had total debt, excluding finance lease liabilities, unamortized discounts and premium, and debt issuance costs of $4,500.0 million and $4,750.0 million at March 31, 2026 and December 31, 2025, respectively, and we were in compliance with our financial and other covenants. The debt at March 31, 2026, primarily consists of senior notes issued in 2026, 2025, 2024, 2023, 2020, and 2015. Interest on the senior notes is payable semi-annually each year. The unamortized discount and debt issuance costs were recorded as "Short-term debt and current portion of long-term debt" and "Long-term debt" in the accompanying consolidated balance sheets, and will be amortized to "Interest expense" in the accompanying consolidated statements of operations within this Form 10-Q over the life of the respective senior notes. The indenture governing the senior notes restricts our ability to, among other things, create certain liens, enter into sale/leaseback transactions, and consolidate with, sell, lease, convey, or otherwise transfer all or substantially all of our assets, or merge with or into, any other person or entity. We have made, and may from time to time in the future make, optional repayments on our debt obligations, which may include repurchases or exchanges of our outstanding notes, depending on various factors, such as market conditions. Any such repurchases may be effected through privately negotiated transactions, market transactions, tender offers, redemptions or otherwise. See Note 7. for additional information on our financing activities.

We have a syndicated revolving credit facility ("Syndicated Revolving Credit Facility") with a borrowing capacity of $1,250.0 million with Bank of America N.A., HSBC Bank USA, N.A., The Toronto-Dominion Bank, N.A., Wells Fargo Bank, National Association, JPMorgan Chase Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., and The Northern Trust Company. The Syndicated Revolving Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions, dividend payments, and the share repurchase program (the "Repurchase Program"). As of March 31, 2026, we were in compliance with all financial and other debt covenants under our Syndicated Revolving Credit Facility. During the three months ended March 31, 2026, we drew $750.0 million under our Syndicated Revolving Credit Facility for share repurchases under the accelerated share repurchase agreements, general corporate purposes, and to pay related fees and expenses, and subsequently repaid the full amount prior to March 31, 2026. As of March 31, 2026 and December 31, 2025, the available capacity under the Syndicated Revolving Credit Facility was $1,245.2 million and $1,245.4 million, which takes into account outstanding letters of credit of $4.8 million and $4.6 million, respectively.

On February 18, 2026, we entered into a term loan credit agreement (the “Term Loan Facility”) with Wells Fargo Bank, National Association. The Term Loan Facility provides for a 364-day senior unsecured delayed draw term loan facility in an aggregate committed principal amount of $500.0 million and carries an interest rate of SOFR plus 95 basis points or a base rate. The financial covenants require that, at the end of any fiscal quarter, we have a consolidated interest rate coverage ratio of not less than 3.00 to 1.00, and a maximum consolidated funded debt leverage ratio of not greater than 3.75 to 1.00. At our election, the maximum consolidated funded debt leverage ratio could be permitted to increase to 4.50 to 1.00 (no more than once) and to 4.25 to 1.00 (no more than once) in connection with the closing of a permitted acquisition. Proceeds of the Term Loan Facility, together with the $750.0 million borrowed under the Company's existing Syndicated Revolving Credit Facility, were used to finance share repurchases under the accelerated share repurchase agreements, to fund general corporate purposes, and to pay related fees and expenses. As of March 31, 2026, the company repaid $250.0 million of the Term Loan Facility and had $250.0 million outstanding under the Term Loan Facility.

Cash Flow

The following table summarizes our cash flow data:

(in millions)

Operating Activities

Net cash provided by operating activities was $390.4 million for the three months ended March 31, 2026, compared to $444.7 million for the three months ended March 31, 2025, a decrease of $54.3 million, or 12.2%. The decrease in operating cash flow was primarily driven by a tax refund received in the prior year that did not recur in the current year, as well as higher interest payments. The increase in interest payments was the result of higher debt balances in the quarter offset in part by higher interest income earned on cash.

Investing Activities

Net cash used in investing activities was $64.4 million for the three months ended March 31, 2026, compared to $57.8 million for the three months ended March 31, 2025, an increase of $6.6 million, or 11.4%. The increase was primarily due to an increase of $10.3 million in capital expenditures, partially offset by the purchase of an additional controlling interest of $4.1 million in the prior year.

Financing Activities

Net cash used in financing activities was $1,977.9 million for the three months ended March 31, 2026, compared to $433.3 million of net cash provided by financing activities for the three months ended March 31, 2025, an increase in cash outflows of $2,411.2 million. The increase in financing cash outflows is primarily due to an increase of $1,426.8 million of common stock repurchases (inclusive of treasury stock not yet settled). Additionally, there was a net repayment of debt of $266.0 million in the three months ended March 31, 2026, compared to debt proceeds of $698.3 million in the three months ended March 31, 2025.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Contractual Obligations

There have been no material changes to our contractual obligations outside the ordinary course of our business from those reported in our annual report on Form 10-K and filed with the Securities and Exchange Commission on February 18, 2026.

Critical Accounting Estimates

Our management’s discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, including those related to stock-based compensation, internally developed software, goodwill and intangible assets, pension and other postretirement benefits, and income taxes. Actual results may differ from these assumptions or conditions. Some of the judgments that management makes in applying its accounting estimates in these areas are discussed under the heading "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 18, 2026. Since the date of our annual report on Form 10-K, there have been no material changes to our critical accounting policies and estimates.

Market risks at March 31, 2026 have not materially changed from those discussed under Item 7A in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 18, 2026.

Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives at the reasonable assurance level.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report on Form 10-Q. Based upon the foregoing assessments, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the three months ended March 31, 2026, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There has been no material change in the information provided under the heading “Risk Factors” in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 18, 2026.