The paragraph introduces the Verisk First Quarter 2025 Earnings Results Conference Call, with all participants initially in listen-only mode. The call features opening remarks from Stacey Brodbar, Verisk's Head of Investor Relations, and includes Lee Shavel, the company's President and CEO, and Elizabeth Mann, the CFO. The earnings release, quarterly earnings presentation, and the 10-Q are accessible on Verisk's website and have been filed with the SEC as an 8-K. The call will be available for replay for 30 days. Forward-looking statements regarding Verisk's future performance are included, and actual results may vary. Details on influencing factors can be found in Verisk's SEC filings, and reconciliations of non-GAAP financial measures are provided on their website.

The paragraph discusses Verisk's positive start to 2025 with strong first-quarter results, highlighted by double-digit subscription growth and overall revenue growth. Organic constant currency revenue grew by 7.9%, driven by 10.6% subscription growth across various business units. The company's focus on cost discipline led to a 130 basis point margin expansion, resulting in a 9.5% growth in OCC adjusted EBITDA. The industry backdrop has improved, with premium increases aligning better with risk levels. Verisk and the American Property Casualty Insurance Association data shows the insurance industry returned to profitability in 2024 with an underwriting gain of $25 billion, the first gain in four years.

The insurance industry is facing a complex risk environment due to factors such as inflation, regulatory changes, rising costs, and severe weather events. Last year saw significant catastrophic losses, mainly from hurricanes and storms, a trend continuing in 2025 with devastating events like the Los Angeles wildfires. Verisk is addressing these challenges by enhancing their data, analytics, and insights for clients, improving their go-to-market strategy since 2024, and focusing on delivering greater insights, connecting data and capabilities, and creating an efficient ecosystem. The company is leveraging these strategies to meet client needs and drive new solutions for the industry.

The paragraph discusses how Verisk helps clients understand and manage risk across their portfolios by rapidly converting data into insights. Through their Core Lines Reimagine project and the Actuarial Hub, Verisk provides early insights into loss cost trends and pricing needs. They offer detailed Executive Insights reports for benchmarking and client performance evaluation, and they enhance their property databases by incorporating diverse data sources. Verisk also updates reconstruction cost data monthly, and sometimes bimonthly, to reflect current material and labor costs across over 470 North American geographies. Clients rely on Verisk for accurate, timely data to maintain appropriate coverage and competitive pricing in a volatile economic environment.

The paragraph discusses Verisk's recent developments in their reconstruction cost analysis and data integration solutions to support clients in navigating changing environments. The quarterly report analyzes cost trends considering weather and economic events. They introduced Enterprise Exposure Manager, a scalable risk evaluation tool that improves risk insights for insurers and reinsurers. They also announced Verisk Synergy Studio, a cloud-native catastrophe modeling platform set to launch in 2026, which received positive feedback at a recent conference. These innovations aim to support Chief Risk Officers and other client needs.

Verisk Synergy Studio is being introduced as a versatile and cost-effective platform deploying catastrophe models, enhancing climate risk understanding for the insurance market. It serves as a central hub connecting Verisk's products and fostering an ecosystem for insurers, reinsurers, brokers, regulators, and policyholders. Verisk is expanding its ecosystem by integrating new partners across underwriting and claims, boosting connectivity and industry interoperability, and increasing revenues. The Regulatory Data Exchange platform launched to streamline data sharing between regulators and carriers across jurisdictions is an example of these efforts. Additionally, Verisk has acquired Simplitium from NASDAQ to expand its Extreme Events business.

The paragraph discusses Simplitium's focus on supporting an open ecosystem for global insurance risk assessment through the acquisition of over 300 third-party models. Elizabeth Mann then reviews the company's financial results for the first quarter, reporting a 7% increase in consolidated revenue to $753 million and a 6% rise in net income to $232 million. Earnings per share grew by 9%, driven by strong operations and a lower share count. Organic constant currency results showed a 7.9% revenue increase, with underwriting and claims both experiencing significant growth. Subscription revenues, comprising 83% of total revenue, increased by 10.6%, fueled by strong pricing, client relationships, and new sales.

The article discusses the company's growth and transformation efforts, highlighting a shift from transactional contracts to committed subscriptions, notably in insurance and anti-fraud sectors. Innovations such as executive insights, the ISO Experience Index, and AI tools within the Mozart Form platform have been introduced, along with significant updates in ratings for homeowners and personal auto insurance. Despite strong subscription growth and anti-fraud solutions, transactional revenues declined due to the shift to subscriptions and challenges in the personal auto and software services segments. The marketing sector shows recovery among insurance clients but faces challenges with more economically sensitive client segments.

In the quarter, OCC reported a 9.5% growth in adjusted EBITDA with a total margin increase to 55.3%, driven by sales leverage, timely expenses, and cost discipline. Over 12 months, adjusted EBITDA margins rose to 55%, an increase of 110 basis points from last year. Net interest expenses rose due to higher debt and rates, with new and retired notes affecting the quarterly run rate. Current leverage is comfortable at 2x EBITDA, aligning with their target of 2x to 3x. The effective tax rate increased to 21.6% from a prior one-time benefit, with expectations of a 23-25% tax rate for the year, subject to variability from stock option activities.

In the first quarter, adjusted net income rose by 4.5% to $245 million, and diluted adjusted EPS increased by 6.1% to $1.73, driven by revenue growth, margin expansion, and a lower average share count, partially offset by increased expenses. Operating cash flow grew by 20% to $445 million and free cash flow by 23% to $391 million, due to higher operating profit and favorable tax timing. By March 31, the company had $1.1 billion in cash, but reduced this by retiring $500 million of 4% notes. A 15% higher cash dividend of $0.45 per share was paid, and a $200 million accelerated share repurchase was completed. They retain $1.4 billion for further repurchases. The company maintained its 2025 outlook with expected revenues between $3.03 billion and $3.08 billion, adjusted EBITDA between $1.67 billion and $1.72 billion, and EPS between $6.80 and $7.10. Tax rate is projected at 23%-25%. Detailed guidance is available in the earnings slide deck on their website. Lee Shavel expressed satisfaction with the year's strong start.

The paragraph discusses Verisk's strategic focus on consistent growth and capital investment, emphasizing their strong client relationships and business opportunities, particularly in the insurance sector. Despite a recent drag in the non-insurance marketing business, Verisk believes this area allows access to insurance carrier client spending. The marketing segment, acquired a few years ago, continues to grow but remains exposed to financial services and mortgage customer segments. Toni Kaplan from Morgan Stanley asks about the long-term viability and outlook of the marketing business, especially in the event of a macroeconomic slowdown in 2025. Elizabeth Mann responds by outlining the business's growth potential and strategic relevance.

The paragraph discusses the challenges and strategies of a business facing potential pressures on discretionary spending. Kelsey Zhu from Autonomous Research asks about trends contributing to strong pricing realization, noting that a significant portion of revenue comes from contracts linked to premium growth. Elizabeth Mann attributes this to delivering client value and a strong premium environment, with premium growth exceeding 10% in full-year '23. Lee Shavel adds that similar performance is seen in other product areas, emphasizing the importance of elevating dialogue and awareness of the value provided. Saurabh Khemka is mentioned as continuing to develop features that will enhance client value.

The paragraph discusses the company's strong margin performance over the past few years and how they've consistently exceeded their long-term growth expectations. The conversation between Faiza Alwy from Deutsche Bank and Elizabeth Mann centers around efficiency and margin optimization efforts. Mann explains that margin efficiency has become integral to their processes, though future margin expansion might slow down. For the quarter, they experienced robust margin growth due to timing of expenditures and strong revenue performance, which included some high-margin storm-associated revenue in their property estimating solutions business.

In the paragraph, Lee Shavel discusses the balance between investment intensity and operating efficiencies, aiming for long-term shareholder benefits. He describes efforts to extend the successful sales model used in large business segments to growth areas like Life Insurance, SBS, and Verisk Marketing Solutions. By applying strategies that worked in Claims, Extreme Events, and Underwriting Decision Analytics, the company hopes to replicate success across these expanding areas.

The paragraph discusses the impact of recent economic uncertainties, such as tariffs, on the business. Alex Kramm from UBS inquires whether these uncertainties have caused delays in decision-making within the industry, specifically the insurance sector. Elizabeth Mann responds that Verisk does not have significant direct exposure to tariff implications, but acknowledges that the insurance industry might face higher costs and lower profitability if costs increase. She mentions that Verisk is actively working with clients to monitor and assess these potential impacts using their data and analytics.

In the paragraph, Andrew Steinerman asks Elizabeth Mann about the expectations for depreciation and amortization (D&A) as a percentage of revenues and its potential impact on return on invested capital (ROIC). Elizabeth Mann explains that while a long-term forecast for D&A as a percentage of revenue hasn't been provided, the current figures are influenced by the completion of long-term projects like the Core Lines Reimagine program and new financial models in Extreme Events solutions. She anticipates the growth rate of D&A will align with CapEx but may be slightly lower due to these developments. Lee Shavel adds that in evaluating ROIC, the company removes D&A expenses and focuses on capital expenditures as part of the invested capital for return calculations. Following this discussion, the operator directs the next question to Jeff Meuler from Baird.

In the paragraph, Jeff Meuler and Elizabeth Mann discuss the long-term benefits and innovations in data and analytics, particularly with the incorporation of AI, which aims to enhance client value and cross-selling opportunities. They mention that many clients are engaging in long-term contracts, benefiting from deeper integration of data into their processes. Gregory Peters from Raymond James expresses interest in how these innovations can help clients become more efficient, acknowledging that many customers still operate on outdated platforms, despite utilizing modern technology and cloud-based approaches.

Lee Shavel addresses the challenges of deploying solutions with legacy systems, noting that the industry is actively modernizing infrastructure through partnerships with third-party vendors. This collaboration allows for better integration and connectivity within the industry, particularly in areas like claims and risk modeling. Shavel highlights their efforts to create more open ecosystems, like their claims platform, which improves efficiency by connecting insurers, contractors, and vendors, streamlining security and validation processes. These initiatives help reduce the burden on customers managing these integrations independently.

In the paragraph, a discussion takes place about Synergy Studio and its role in enhancing efficiency for clients. George Tong from Goldman Sachs asks about the company's approach to improving price realization and whether it represents a structural change. Lee Shavel responds, explaining that investments are being made based on client feedback to enhance value creation, particularly in key areas like underwriting and claims related to extreme events. Shavel acknowledges that there's a perpetual gap in perception of value between the company and its clients, indicating that closing this gap is an ongoing process. The conversation highlights the continuous effort to provide and capture value alongside clients. Following this, David Motemaden from Evercore ISI poses another question about the broader market.

The paragraph addresses questions related to the insurance industry, specifically regarding trends in pricing and customer focus on efficiency. Lee Shavel notes that although pricing in commercial property and casualty (P&C) and personal auto sectors is becoming more competitive, customers have consistently focused on efficiency, with no significant change due to pricing trends. The industry saw an underwriting gain in 2024, highlighting efficient practices. Regarding stock buybacks, Elizabeth Mann explains that they don't forecast buyback amounts, as they prioritize organic investments, explore mergers and acquisitions, commit to dividends, and consider balance sheet strength before deciding on share repurchases.

The paragraph discusses the reasons behind a 4% year-on-year decline in transaction revenue as addressed by Elizabeth Mann in response to a question. The decline was partially due to a significant contract conversion, which impacted the quarter by 200 to 250 basis points. Other factors include contract conversions in the antifraud space and with ecosystem partners, as well as committed contracts in the TPA customer segment. Additionally, some transactional revenue comes from implementation projects, which can be inconsistent and impacted by previous large projects in their Specialty Business Solutions. Despite these challenges, they plan to continue returning value to shareholders through buybacks and dividends.

In the paragraph, the speaker discusses their company's approach to transactional revenue, explaining that it results from their overall business operations rather than being managed separately. They mention facing challenges in their auto business, including attrition in the InsurTech segment and a mismatch between their business mix and the broader market. Additionally, they note decreased activity in non-rate action deals due to industry rate recoveries. A question is posed by Jason Haas from Wells Fargo about changes in client conversations amid macroeconomic uncertainties and which business areas are economically sensitive. Lee Shavel responds, indicating no fundamental change in client priorities, though there is increased focus on tariff impacts and inflation affecting claim costs.

In the paragraph, a company discusses its focus on tracking costs related to supplies, materials, and labor through its Property Estimating Solutions business, especially in light of the tariff situation. Elizabeth Mann adds that they are monitoring the macroeconomic impact on non-carrier customer segments, despite federal government revenues being less than 1% of their total. Lee Shavel mentions that while some segments are economically sensitive, the majority of their revenues come from insurance clients who are less affected by tariffs. Additionally, in response to a question from Brendan, Lee Shavel notes that the current market uncertainty and potential valuation decreases present opportunities for mergers and acquisitions to enhance their capabilities.

The paragraph discusses challenges faced by the private equity community in monetizing investments but notes an improving environment. It highlights the search for products that add value to the insurance industry, mentioning a recent acquisition of Simplitium from NASDAQ. The focus is on enhancing businesses through accelerated distribution or integration into their products. In the Q&A, Jeff Silber from BMO Capital Markets inquires about the impact of weather events on the business in the second quarter, specifically regarding wildfires. Elizabeth Mann clarifies that wildfires had minimal impact but notes some benefits from weather-related effects, including hurricanes and severe storms. Lee Shavel adds that their wildfire model was the first submitted to the California Department of Insurance.

The paragraph discusses the interest and inquiries from clients regarding a wildfire risk model for California. Robert Newbold provides an update, expressing satisfaction with the updated model released in June 2024, which has been well-received by clients for its value in risk management. They are also working with the California Department of Insurance to use the model for rate-making, aiming to enhance global resilience in the market. Lee Shavel emphasizes the importance of their analytics and models in light of severe weather events. The call concludes with an operator's note.

This summary was generated with AI and may contain some inaccuracies.