Verisk Analytics Financial Model
Business Services Company Financials Example (Free Excel Download)
Verisk Analytics is a leading data analytics and technology partner to the global insurance industry, providing predictive analytics and decision support solutions.
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About this model
This model evaluates the equity valuation and cash flow generation profile of Verisk Analytics to determine if its pure-play insurance data strategy, ongoing shift to subscription revenues, and operating leverage justify its current market premium.
Verisk Analytics is a leading data analytics and technology partner to the global insurance industry, providing predictive analytics and decision support solutions. The company operates exclusively within the insurance ecosystem following a series of strategic divestitures, helping property and casualty (P&C) insurers manage risk, optimise underwriting, and process claims efficiently.
The business is divided into two primary segments: Underwriting (approximately 70% of revenue) and Claims (approximately 30% of revenue). The vast majority of revenue is generated in the United States, though the company is actively expanding its footprint in the UK and Europe. Verisk operates an asset-light, highly recurring business model, with subscription revenues accounting for roughly 84% of total consolidated revenue.
Verisk holds a near-monopoly competitive position in certain US P&C insurance data markets, such as its proprietary Forms, Rules, and Loss Costs data, and its solutions are embedded in the workflows of all top 100 US P&C insurers. Over the last three years, the company has undergone a major transformation to become a pure-play insurance data provider, divesting its Financial Services segment (2022), Energy segment (2023), Atmospheric and Environmental Research unit (2024), and Marketing Solutions business (early 2026).
The downloadable Verisk Analytics financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
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Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
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Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsVerisk Analytics financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $2.46B | $2.50B | $2.68B | $2.88B | $3.07B |
| Gross profit | $1.61B | $1.67B | $1.80B | $1.98B | $2.15B |
| Operating income | $911.4M | $1.41B | $1.13B | $1.25B | $1.34B |
| Net income | $666.2M | $953.9M | $614.6M | $958.2M | $908.3M |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Verisk Analytics
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Underwriting
- Segment name: Underwriting
- Revenue driver formula: (Prior Year Subscription Revenue x Retention Rate x Pricing Uplift) + New ACV + Transactional Volume
- Historical growth rate: 7.0% to 8.0% Organic Constant Currency (OCC) CAGR over the last 3 years.
- Key growth levers and headwinds: Growth is driven by the "Core Lines Reimagine" initiative, extreme event solutions, and life insurance analytics. Headwinds include the mechanical reduction of reported revenue from recent divestitures (AER, Marketing Solutions).
- Pricing dynamics: High pricing power due to the mission-critical, embedded nature of its regulatory and loss cost data. Contracts typically include annual price escalators.
- Revenue recognition notes: Subscription revenues are recognised rateably over the contract term.
- Seasonality: Generally stable due to the subscription model, though consulting and certain specialty data sales can skew slightly higher in the fourth quarter.
Claims
- Segment name: Claims
- Revenue driver formula: (Software Subscriptions x ARPU) + (Transactional Claim Volumes x Price per Claim)
- Historical growth rate: 4.0% to 6.0% OCC CAGR.
- Key growth levers and headwinds: Driven by property estimating solutions (Xactware) and anti-fraud solutions. Headwinds include periods of benign weather, which reduce the volume of transactional claims processed.
- Pricing dynamics: Spot pricing for transactional claim assessments and contractual pricing for core estimating software.
- Revenue recognition notes: Transactional revenue is recognised at the point in time the service is delivered; software is recognised over time.
- Seasonality: Highly sensitive to severe weather events (hurricanes, wildfires). The third and fourth quarters typically see spikes in transactional revenue if major storms make landfall.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Cost of revenues primarily includes data acquisition costs, cloud hosting and computing expenses, and personnel costs for data maintenance and customer support.
- Gross margin range: 63.0% to 66.0% over the last 5 years.
- Key input costs and commodity exposures: Cloud computing fees (AWS/Azure) and third-party data licensing fees. No direct commodity exposure.
- How COGS scales with revenue: High operating leverage. Once a dataset or software platform is built, the marginal cost of delivering it to an additional insurer is near zero.
Operating Expenses
- R&D: Verisk does not report a standalone R&D line; these costs are blended into Cost of Revenues and SG&A, with significant software development costs capitalised on the balance sheet.
- SG&A: Includes sales, marketing, and administrative personnel. SG&A scales slower than revenue due to the captive nature of the customer base.
- Depreciation & Amortisation: Typically runs at 8.0% to 10.0% of revenue, heavily skewed towards the amortisation of intangible assets from historical acquisitions and capitalised software.
- Stock-Based Compensation: Runs at approximately 2.5% to 3.5% of revenue.
- Restructuring / one-time charges: Frequent in recent years due to the divestiture of the Energy and Financial Services segments, alongside internal ERP modernisation programmes.
Margin Profile
- Gross margin: ~65.0%.
- EBITDA margin: Adjusted EBITDA margin ranges from 52.0% to 55.0% (reported at 54.7% for FY2024).
- Operating margin: 38.0% to 42.0%.
- Net margin: 25.0% to 30.0%.
- Margin trend: Expanding. The company delivered 120 basis points of margin expansion in 2024, driven by the divestiture of lower-margin non-insurance businesses and strong operating leverage.
Balance Sheet Structure
- Total assets: Approximately $4.0 billion to $4.5 billion.
- Key asset categories: Goodwill, intangible assets, and capitalised software dominate the asset base.
- Goodwill & intangibles as % of total assets: Typically 65.0% to 75.0%, reflecting a long history of bolt-on acquisitions.
- Working capital profile:
- Days Sales Outstanding (DSO): 55 to 65 days.
- Days Inventory Outstanding (DIO): 0 days (not applicable for a data provider).
- Days Payable Outstanding (DPO): 30 to 40 days.
- Net working capital as % of revenue: Consistently negative.
- Working capital funding: The company operates with negative net working capital due to large deferred revenue balances from upfront subscription billings, providing a structural cash flow advantage.
- PP&E: Minimal physical footprint. PP&E consists almost entirely of computer equipment and leasehold improvements.
- Right-of-use assets / operating leases: Modest, representing office space leases globally.
Capital Expenditure & Investment
- Capex as % of revenue: 8.0% to 9.0% ($245 million to $265 million annually).
- Maintenance capex vs. growth capex: Approximately 30% maintenance and 70% growth.
- Major capex programmes underway or planned: Internal financial and human capital ERP system modernisation, alongside continuous investment in the "Core Lines Reimagine" data architecture.
- Capitalised software / development costs: Highly material. The majority of reported capex consists of capitalised internal-use software development costs.
- M&A pattern: Serial bolt-on acquirer historically, though recent years have focused heavily on divestitures to streamline the portfolio.
- Typical acquisition multiple paid: 15x to 20x EV/EBITDA for niche data assets.
Debt & Capital Structure
- Total debt: Approximately $2.8 billion to $3.0 billion.
- Debt/EBITDA ratio: Current leverage sits around 1.8x to 2.2x, well within management's target range.
- Credit rating: Investment grade (Baa2/BBB).
- Key debt instruments: Unsecured senior notes with staggered maturities and a revolving credit facility.
- Maturity profile: Well-laddered, with average maturities exceeding 5 years.
- Interest rate profile: Predominantly fixed-rate senior notes.
- Covenants: Standard investment-grade covenants; no restrictive financial maintenance covenants that are currently at risk.
- Share repurchase programme: Highly active. The company frequently uses excess free cash flow and divestiture proceeds to buy back stock, reducing share count by 2% to 4% annually.
- Dividend policy: Initiated in 2019. The company grows the dividend aggressively, with a 10.3% CAGR since inception and recent annual hikes of 15.0%.
Cash Flow Characteristics
- Operating cash flow conversion: OCF / Net Income typically exceeds 1.2x.
- Free cash flow margin: FCF / Revenue is exceptionally strong, running at 35.0% to 39.0% ($1.19 billion FCF on $3.07 billion revenue in 2025).
- Major non-cash items: Depreciation, amortisation of intangibles, and stock-based compensation bridge the gap between net income and OCF.
- Working capital cash flow impact: Deferred revenue growth acts as a consistent source of cash as the subscription business expands.
- Capex intensity: Low physical intensity, but moderate software development intensity.
- Cash tax rate vs. GAAP effective tax rate: Cash taxes are generally lower than the GAAP effective rate due to the timing of tax deductions on amortisable intangibles and stock-based compensation windfalls.
Sheet Structure
- Assumptions: Hardcoded inputs for OCC growth rates, adjusted EBITDA margins, tax rates, capex intensity, and WACC.
- Revenue Build: Detailed segment build forecasting Underwriting and Claims. Each segment must be split into Subscription Revenue and Transactional Revenue to capture the ongoing business model shift.
- Income Statement: Consolidated view reporting Revenue, Cost of Revenues, Gross Profit, SG&A, D&A, Operating Income, Interest Expense, Tax Expense, and Net Income.
- Balance Sheet: Assets (Cash, Accounts Receivable, Prepaid Expenses, PP&E, Intangible Assets, Goodwill) and Liabilities/Equity (Accounts Payable, Accrued Liabilities, Deferred Revenue, Long-Term Debt, Retained Earnings).
- Cash Flow Statement: Indirect method starting with Net Income, adding back D&A and SBC, adjusting for changes in NWC (specifically Deferred Revenue), less Capex, less Dividends, less Share Repurchases, plus/minus Debt issuance/repayment.
- Debt Schedule: Tranche-by-tranche breakdown of senior notes, tracking maturities, fixed interest rates, and revolver drawdowns.
- DCF Valuation: Unlevered Free Cash Flow calculation, WACC build, Terminal Value calculation, and implied share price output.
Key Financial Relationships
- Underwriting Revenue = Prior Year Underwriting Revenue x (1 + Underwriting OCC Growth Rate)
- Claims Revenue = Prior Year Claims Revenue x (1 + Claims OCC Growth Rate)
- Total Consolidated Revenue = Underwriting Revenue + Claims Revenue
- Subscription Revenue = Total Consolidated Revenue x Subscription Percentage (trending towards 85.0%)
- Adjusted EBITDA = Total Consolidated Revenue x Adjusted EBITDA Margin
- D&A Expense = Total Consolidated Revenue x D&A % of Revenue
- Operating Income (EBIT) = Adjusted EBITDA - D&A Expense - Stock Based Compensation
- Deferred Revenue Balance = Total Consolidated Revenue x Deferred Revenue % of Sales
- Change in Deferred Revenue = Current Period Deferred Revenue - Prior Period Deferred Revenue (flows to OCF as a positive adjustment when growing)
- Capital Expenditures = Total Consolidated Revenue x Capex % of Revenue
- Free Cash Flow = Operating Cash Flow - Capital Expenditures
- Interest Expense = Average Debt Balance x Weighted Average Interest Rate
- Share Count = Prior Period Share Count - (Share Repurchase Spend / Average Share Price)
- Dividends Paid = Share Count x Dividend Per Share
Cross-Sheet Dependencies
The Assumptions sheet drives the Revenue Build, which calculates the top line for the Income Statement. The Income Statement generates Net Income, which acts as the starting point for the Cash Flow Statement. The Cash Flow Statement calculates the change in cash and debt, which feed directly into the Balance Sheet. The Balance Sheet calculates the Deferred Revenue balance, which loops back to the working capital section of the Cash Flow Statement. The Debt Schedule relies on the cash shortfall/surplus from the Cash Flow Statement to determine revolver activity, and outputs Interest Expense back to the Income Statement. Finally, the DCF Valuation pulls Operating Income and Tax from the Income Statement, and Capex/D&A from the Cash Flow Statement.
Sign Convention
- Revenues, assets, and equity balances are entered as positive numbers.
- Expenses (COGS, SG&A, Interest, Taxes) are entered as positive numbers in their respective build schedules but subtracted in aggregation formulas (e.g., Gross Profit = Revenue - COGS).
- Liability balances (Debt, Accounts Payable) are entered as positive numbers.
- On the Cash Flow Statement, cash inflows (e.g., Net Income, adding back D&A, increase in Deferred Revenue) are positive. Cash outflows (e.g., Capex, Dividends, Share Repurchases, decrease in Accounts Payable) are negative.
Things Most Likely to Go Wrong
- Failing to normalise historical revenue for the divestitures of the Energy, Financial Services, AER, and Marketing Solutions segments. The model must use the continuing operations baseline.
- Underestimating the cash flow generation by ignoring the working capital benefit of deferred revenue. As subscription revenue grows, deferred revenue must grow proportionally, providing a cash inflow.
- Mismodelling the margin profile by including divested segments. The pure-play insurance business has a structurally higher margin (mid-50s Adjusted EBITDA) than the historical consolidated entity.
- Confusing reported revenue growth with Organic Constant Currency (OCC) growth. The model should forecast on an OCC basis and layer on M&A/FX assumptions separately if needed.
- Overestimating Claims segment growth by straight-lining historicals that included severe hurricane seasons. Transactional claims revenue is volatile.
- Double-counting R&D. Verisk capitalises a significant portion of its software development costs, meaning it appears in Capex and amortises through D&A rather than hitting operating expenses immediately.
- Excluding stock-based compensation from operating expenses when calculating GAAP EBIT. Adjusted EBITDA excludes SBC, but GAAP metrics must include it.
- Miscalculating the share count reduction. Verisk aggressively buys back stock, which significantly boosts EPS growth relative to net income growth.
Validation Checks
- Adjusted EBITDA margin must remain in the 54.0% to 56.0% range based on recent pure-play performance.
- Capex as a percentage of revenue should consistently run between 8.0% and 9.0%.
- Free Cash Flow conversion (FCF / Net Income) should be > 1.1x, reflecting the asset-light model and deferred revenue benefits.
- Subscription revenue as a percentage of total revenue must remain above 82.0% and trend slightly upwards.
- The Balance Sheet must balance perfectly in all forecast periods (Total Assets = Total Liabilities + Equity).
- Debt/EBITDA should remain between 1.8x and 2.5x; flag if the model pays down all debt, as the company typically refinances to maintain efficient leverage.
- The effective tax rate should remain between 23.0% and 25.0% per management guidance.
- Dividend growth should reflect the historical 10.0% to 15.0% CAGR without pushing the payout ratio beyond 35.0% of Free Cash Flow.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Underwriting OCC Growth | 7.0 | % | Aligns with recent historical performance and management's long-term targets. |
| Claims OCC Growth | 5.0 | % | Reflects steady software growth offset by normalised transactional weather volumes. |
| Subscription Revenue Mix | 84.0 | % | Based on Q4 2025 reported figures, reflecting the ongoing conversion from transactional. |
| Adjusted EBITDA Margin | 54.7 | % | Actual reported FY2024 margin, representing the pure-play insurance baseline. |
| D&A as % of Revenue | 9.0 | % | Historical average driven by amortisation of capitalised software and M&A intangibles. |
| Stock-Based Comp as % of Rev | 3.0 | % | Consistent with historical run-rate for employee retention and executive compensation. |
| Capex as % of Revenue | 8.5 | % | Midpoint of management's $245M-$265M guidance on current revenue base. |
| Deferred Revenue as % of Rev | 11.0 | % | Calculated from historical balance sheet liabilities relative to total revenue. |
| Effective Tax Rate | 24.0 | % | Midpoint of management's normalised guidance range (23% to 25%). |
| Weighted Average Interest Rate | 4.5 | % | Blended rate of outstanding fixed-rate senior notes. |
| Annual Share Reduction | 2.5 | % | Reflects consistent deployment of free cash flow towards share repurchases. |
| Dividend Growth Rate | 15.0 | % | Matches the board-approved dividend increases for 2024 and 2025. |
| WACC | 8.0 | % | Standard discount rate for a low-beta, highly predictable subscription data business. |
| Terminal Growth Rate | 3.0 | % | Reflects long-term pricing power and GDP+ growth in the P&C insurance market. |
Data Sources & Benchmarks
- Filings: SEC EDGAR (10-K, 8-K, 10-Q) and the Verisk Investor Relations website (investor.verisk.com) for earnings presentations and financial supplements.
- Key peers for benchmarking: S&P Global (SPGI), Moody's (MCO), FactSet (FDS), and Gartner (IT). These peers share similar asset-light, subscription-based B2B data models.
- Industry data sources: AM Best for P&C insurance industry premium growth and profitability trends, which dictate Verisk's end-market health.
- Consensus estimates: FactSet or Bloomberg for forward-looking OCC growth and adjusted EBITDA margin consensus.
Sources
- Verisk Analytics, Inc. Form 10-K for the fiscal year ended December 31, 2023 (SEC EDGAR).
- Verisk Analytics, Inc. Q4 2024 Earnings Release and Call Transcript (February 2025).
- Verisk Analytics, Inc. Q1 2025 Earnings Release (May 2025).
- Verisk Analytics, Inc. Q4 2025 Earnings Release and Call Transcript (February 2026).
- Verisk Investor Relations Presentations (2024-2026) detailing the divestiture of AER and Marketing Solutions.
Do more with the Verisk Analytics model
Frequently asked
What does Verisk Analytics do?+
Verisk Analytics is a leading data analytics and technology partner to the global insurance industry, providing predictive analytics and decision support solutions. The company helps property and casualty (P&C) insurers manage risk, optimize underwriting, and process claims efficiently.
How does Verisk Analytics generate its revenue?+
Verisk Analytics generates revenue primarily through its Underwriting and Claims segments, with roughly 84% of total consolidated revenue coming from subscriptions. Its solutions, including proprietary Forms, Rules, and Loss Costs data, are embedded in the workflows of all top 100 US P&C insurers, driving highly recurring income.
What are the key capital expenditure assumptions in the Verisk Analytics financial model?+
The financial model assumes Verisk's capital expenditure as a percentage of revenue to be approximately 9.93%. This capex primarily consists of capitalised internal-use software development costs, reflecting continuous investment in its data architecture and ERP system modernization.
What are the primary profitability assumptions used in the Verisk Analytics financial model?+
The financial model uses key profitability assumptions such as COGS at approximately 34.55% of revenue and SGA at about 15.87% of revenue. These figures reflect Verisk's asset-light, highly recurring business model and its operating leverage.
Why is Verisk Analytics' negative net working capital important for its cash flow generation?+
Verisk Analytics consistently operates with negative net working capital, which provides a structural cash flow advantage. This is primarily due to large deferred revenue balances resulting from upfront subscription billings from its clients.
What is the purpose of the downloadable Excel model for Verisk Analytics?+
The downloadable Excel model for Verisk Analytics evaluates the company's equity valuation and cash flow generation profile. Its purpose is to determine if Verisk's pure-play insurance data strategy, ongoing shift to subscription revenues, and operating leverage justify its current market premium.
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