Breaking Down Verisk Analytics, Inc. (VRSK) Financial Health: Key Insights for Investors

If you're looking at Verisk Analytics, Inc. (VRSK) right now, you're seeing a classic data-analytics story with a near-term weather problem. The core business, providing critical data to the insurance industry, is defintely still a cash machine, but the stock got hit hard after the Q3 2025 earnings report. Here's the quick math: management had to revise their full-year revenue guidance downward to a range of $3.05 billion to $3.08 billion, mostly because of a historically low level of severe weather that slowed demand for their property claims estimating tools. That's a real headwind.

But, you can't ignore the underlying financial health. Verisk reported Q3 2025 net income of $226 million, a 2.5% increase, and more importantly, free cash flow surged by nearly 40% to $336 million. That kind of cash generation-which is the money a company has left over after paying for its operations and capital expenditures (CapEx)-is a huge signal of business quality. So, you have a revenue growth slowdown, but a powerful cash flow story, and analysts are still expecting adjusted earnings per share (EPS) to land around the $6.90 midpoint for the full year. We need to break down if the market is overreacting to a temporary weather cycle or if this lowered revenue guidance signals a deeper competitive shift.

Revenue Analysis

You want to know where the money is coming from for Verisk Analytics, Inc. (VRSK), and the quick answer is this: it's a data company that runs on a very stable, subscription-heavy model, almost entirely focused on the insurance industry. For the full fiscal year 2025, the company expects consolidated revenue to land in the range of $3.05 billion to $3.08 billion, which is a solid, predictable flow.

Here's the quick math on their revenue streams: a massive 84% of their total revenue in the third quarter of 2025 came from subscriptions, which is the kind of recurring, high-quality revenue that analysts defintely love. This subscription model is the engine, growing at a strong 8.7% on an organic constant currency (OCC) basis in Q3 2025.

The business is now structured primarily around a single segment, Insurance, which is then split into two core business units that drive this revenue. This setup makes the revenue breakdown very clear for investors.

• Underwriting: This unit contributed about 70% of the total revenue in Q1 2025. It focuses on helping insurers assess and price risk with products like forms, rules, loss cost services, and extreme event solutions. Underwriting revenue grew 6.9% in Q3 2025.
• Claims: This unit generated the remaining 30% of Q1 2025 revenue. Its services, including anti-fraud solutions and property estimating, are crucial after a loss event. Claims revenue grew 3.6% in Q3 2025.

The year-over-year growth rate for total revenue in Q3 2025 was 5.9%, which is a healthy pace for a large, established data provider. What this estimate hides, though, is the impact of weather. The lower-margin transactional revenue stream-the part that is not subscription-based-declined because of a historically low level of severe weather events in Q3 2025, which negatively impacted overall growth by about 1%. Less catastrophic weather means fewer claims processed through their systems.

You should also note a strategic change: Verisk Analytics sold its Atmospheric and Environmental Research (AER) business in December 2024, which was part of the Underwriting segment. This move further sharpens their focus on the core insurance data and analytics market. If you want to dive deeper into who is buying into this focused strategy, you can read more here: Exploring Verisk Analytics, Inc. (VRSK) Investor Profile: Who's Buying and Why?

Here is a summary of the quarterly performance that shows the growth drivers:

The key takeaway is that the subscription business is strong, growing faster than the overall revenue, and providing a reliable foundation that mitigates the volatility of the transactional business, which is tied to unpredictable events like severe weather.

Profitability Metrics

You want to know if Verisk Analytics, Inc. (VRSK) is generating real profit, not just revenue. The short answer is yes, and its margins are elite for the sector. For the third quarter of 2025, Verisk Analytics, Inc. reported a Gross Profit Margin of around 70.13%, an Operating Profit Margin of about 45.02%, and a Net Profit Margin of roughly 29.35%.

These numbers tell a story of a business model with serious structural advantages. The high Gross Profit Margin-the revenue left after covering the direct cost of delivering its data and analytics-is a clear sign of an asset-light, subscription-based model. It's a classic sign of a software-as-a-service (SaaS) or data-as-a-service business, where the cost to serve an extra client is low.

Margin Trends and Operational Efficiency

When you look at the trends, you see a mixed but ultimately strong picture. In Q2 2025, the company's net income declined by 17.7%, but management quickly stabilized things, delivering a 2.5% net income increase in Q3 2025, with revenue growing by 5.9%. The real operational strength shows in the Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin.

This margin expanded to 55.8% in Q3 2025, reflecting what the company calls strong operational performance and cost discipline. Here's the quick math: Adjusted EBITDA grew by 7.2% in Q3, outpacing the 5.9% revenue growth. That difference is operational leverage-they are growing profit faster than sales, which is defintely what you want to see.

• Gross Margin: 70.13% (Q3 2025)
• Operating Margin: 45.02% (Q3 2025)
• Net Margin: 29.35% (Q3 2025)

Peer Comparison: Verisk vs. The Market

Verisk Analytics, Inc.'s profitability ratios don't just look good in a vacuum; they look great against the industry. The company's business model, which is heavily reliant on proprietary data and a subscription revenue stream, allows it to generate margins far above the average.

The Q3 2025 Net Profit Margin of 29.35% is substantially higher than the blended net profit margin for the entire S&P 500 Information Technology sector, which stood at 27.7% for the same period. Plus, when you compare its TTM Net Margin of 30.42% to a competitor like Automatic Data Processing, which has a Net Margin of 19.79%, Verisk Analytics, Inc. is clearly in a different league. That wide gap in profitability is a moat-a competitive advantage that is hard to breach.

The Gross Margin of 70.13% is on the lower end of the Software-as-a-Service (SaaS) benchmark of 75%-85%, but it is well above the 55%-65% range for Professional Services, confirming its high-value, data-product focus. This superior margin profile is a key reason why the company can project full-year 2025 Adjusted EBITDA guidance between $1.7 billion and $1.74 billion on revenue of $3.05 billion to $3.08 billion.

For a deeper dive into who is betting on this profitability, you should read Exploring Verisk Analytics, Inc. (VRSK) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

Verisk Analytics, Inc.'s (VRSK) financing mix is heavily weighted toward debt, which is a key factor for any investor to understand. The company uses significant financial leverage (borrowed money) to fund its operations and growth, resulting in a very high debt-to-equity ratio that is far outside the industry norm.

As of the quarter ending September 2025, Verisk Analytics, Inc. reported total debt components that are substantial. The company held $1,516 million in short-term debt and capital lease obligations, plus $3,373 million in long-term debt and capital lease obligations. That puts their total debt load at roughly $4.89 billion for the period. To be fair, this high debt level is a deliberate strategy to maximize returns on equity, but it carries inherent risk.

Here's the quick math on leverage:

• Short-Term Debt: $1,516 Million
• Long-Term Debt: $3,373 Million
• Total Stockholders' Equity: $377 Million

This structure leads to a Debt-to-Equity (D/E) ratio of 12.98 as of September 2025. This ratio measures how much debt a company uses to finance its assets relative to the value of shareholders' equity. For context, the average D/E ratio for many companies in the broader Business Services or Asset Management sectors is typically less than 1.0, often around 0.95. A ratio of nearly 13.0 signals an extremely aggressive financing model where debt dwarfs equity.

The company is defintely aware of its leverage. In March 2025, S&P Global Ratings affirmed its 'BBB' issuer credit rating with a stable outlook. This rating is investment-grade, which is a crucial distinction, but it's still at the lower end of that spectrum. This rating was tied to a proposed issuance of senior unsecured notes, where Verisk Analytics, Inc. planned to use up to $500 million of the proceeds to repay existing notes due in June 2025. This demonstrates a continuous cycle of refinancing to manage their maturity wall.

Verisk Analytics, Inc. manages this high leverage by maintaining a strong cash flow from its data and analytics business, which is less capital-intensive than a manufacturing business. Their stated leverage target (Debt to EBITDA) is between 2x and 3x through 2026, which is a more relevant metric for a high-margin data company than the D/E ratio. Still, the massive D/E ratio is a visual warning: any sustained dip in their earnings before interest, taxes, depreciation, and amortization (EBITDA) could quickly make their debt-servicing costs feel heavy.

What this estimate hides is that a significant portion of the equity is offset by treasury stock from aggressive share repurchases, which artificially inflates the D/E ratio. But even accounting for that, the reliance on debt funding is clear. For a more complete picture of the company's financial standing, you should review our full analysis at Breaking Down Verisk Analytics, Inc. (VRSK) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Verisk Analytics, Inc. (VRSK) can comfortably cover its near-term obligations, and the answer, based on the latest 2025 data, is a qualified yes. The company's liquidity position is strong, largely thanks to its highly cash-generative subscription model, but we must also factor in its recent debt movements.

The standard measures of short-term financial health, the current and quick ratios, show a solid, if not overly conservative, position. The current ratio, which compares all current assets to current liabilities, stands at approximately 1.19x as of November 2025. This means Verisk Analytics, Inc. has $1.19 in current assets for every dollar of current liabilities. For a service-based business like this, that's a perfectly healthy number.

The quick ratio (or acid-test ratio), which strips out less-liquid assets like inventory, is also robust at about 1.14x. Since Verisk Analytics, Inc. has minimal inventory, the two ratios are close, which is exactly what you'd expect from a data and analytics provider. This tells us the company can meet its immediate debts using only its most liquid assets-cash and receivables. That's a strong sign of operational efficiency.

Working Capital Trends and Cash Position

The most significant working capital trend in 2025 is the surge in cash. The company's cash and cash equivalents jumped to approximately $2,107.9 million in the third quarter of 2025, up significantly from the prior year. This massive cash cushion is a clear strength.

Here's the quick math on why Verisk Analytics, Inc. has such a comfortable working capital position:

• High-margin, recurring subscription revenue (making up about 83% of total revenue).
• An improvement in the timing of cash collections from customers, which boosted net cash from operations.
• Minimal inventory to manage, so capital isn't tied up in physical goods.

Honestly, a current ratio just over 1.0x is fine when your business model is this predictable. You don't need a 2.0x ratio when cash flow is so reliable.

Cash Flow Statement Overview (2025)

Looking at the cash flow statement for the first nine months of 2025 shows the real engine of the business: its operating activities. This is where the company shines, generating substantial cash that funds its strategic moves and shareholder returns.

Operating cash flow is the biggest strength here, reaching over $1 billion for the nine-month period. This strong cash generation is what allows the company to fund its investing activities-like the $234.5 million used in Q3 2025 for acquisitions and capital expenditures-without stress. The 39.6% growth in free cash flow in Q3 2025 is defintely a key takeaway for investors.

Liquidity Concerns and Strengths

The primary liquidity strength is the sheer volume and predictability of operating cash flow, driven by subscription revenue. This is a business built on recurring payments, which minimizes the risk of a sudden cash crunch.

However, the financing side presents a key solvency risk to monitor. Total debt surged to $4,750 million as of September 30, 2025, up from $3,050 million at the end of 2024, due to the issuance of new senior notes. This debt was partially used to retire older notes and fund the large cash balance. While the debt-to-EBITDA ratio remains manageable at around 2.0x (pro forma Q1 2025) and the company maintains a robust credit facility, the higher interest expense will be a drag on net income. The cash from this debt issuance is what largely inflated the current assets, giving the current ratio its boost.

To understand the full picture, you should also check out Exploring Verisk Analytics, Inc. (VRSK) Investor Profile: Who's Buying and Why?, but the action item here is clear: Monitor the cost of the new debt and ensure the acquisitions funded by this capital lead to a commensurate increase in future operating cash flow.

Valuation Analysis

You're looking at Verisk Analytics, Inc. (VRSK) and asking the core question: Is this stock overvalued, fairly valued, or a hidden gem? The short answer is that, based on traditional metrics in November 2025, Verisk screens as expensive, but you need to look past the sticker price to understand why. It's a high-quality data and analytics business, and those rarely trade cheap.

The market is telling us this is a premium growth stock, not a value play. Here's the quick math on the key valuation ratios (multiples) as of late 2025:

• Price-to-Earnings (P/E) Ratio: The trailing twelve months (TTM) P/E ratio is sitting at about 33.67. That's significantly higher than the S&P 500 average and even the broader Industrials sector average of around 24.67.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio, which accounts for debt, is around 19.25. For a software and data provider, this suggests a high valuation, but it's a multiple that reflects the company's strong cash flow generation.
• Price-to-Book (P/B) Ratio: At a staggering 83.20, this ratio is almost meaningless for Verisk. It just shows that the company's value comes from intangible assets-proprietary data, models, and customer relationships-not physical assets on a balance sheet.

A P/E of 33.67 is defintely high, but it's actually lower than Verisk's own 5-year average of 44.98, so to be fair, the stock is cheaper than it has been historically.

Stock Performance and Analyst Sentiment

The stock price trend over the past 12 months has been volatile, but mostly down. The stock closed at around $223.16 on November 21, 2025, which represents a decline of 23.24% over the last year. This drop is a key opportunity, as the price is well off its 52-week high of $322.92.

The analyst community is largely on the sidelines right now. The consensus rating from 18 research firms is a 'Hold.' The average 12-month price target is approximately $282.14, which suggests a potential upside of about 26% from the current price. What this estimate hides is the mixed opinions: some analysts have recently trimmed their targets, while others maintain a bullish long-term view based on the company's recurring revenue model.

Dividend Profile: Income vs. Growth

Verisk Analytics, Inc. is not an income stock; it's a growth stock that happens to pay a dividend. The annual dividend is currently $1.80 per share, which translates to a modest dividend yield of about 0.81%. The payout ratio is very sustainable at roughly 27.51% of earnings. This low payout ratio is actually a good sign for shareholders focused on growth, as it means the company is reinvesting most of its profits back into the business to fuel future expansion and acquisitions. For a deeper dive into the company's fundamentals, you can check out Breaking Down Verisk Analytics, Inc. (VRSK) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Verisk Analytics, Inc. (VRSK) because their data is the backbone of the insurance industry, but even a market leader faces real headwinds. The biggest near-term risk is a simple, unpredictable one: the weather. Plus, you have to watch regulatory scrutiny on their growth strategy.

Verisk's financial health, while generally solid-Q3 2025 Adjusted EBITDA hit $429 million-is still exposed to both external market volatility and internal strategic execution challenges. In October 2025, the company had to revise its full-year revenue guidance downward to a range of $3.05 billion to $3.08 billion, mostly due to these factors.

Market and Operational Volatility

The core business is highly sensitive to the very risks it helps clients manage. In Q3 2025, a historically low level of severe weather events-like hurricanes not making landfall in the US through September-hit their transactional revenue hard. This is the part of their business that charges per claim or catastrophe model run.

Here's the quick math: that lack of severe weather negatively impacted growth by approximately 1%, causing transactional revenues to decline 8.8% on an Organic Constant Currency (OCC) basis. That's a direct, revenue-line impact from a factor they can't control. Also, a reduction in government contract spending presents a specific, though smaller, headwind.

• Weather-related transactional revenue is volatile.
• Higher net interest expenses are a financial drag.
• Competition forces continuous, costly innovation.

Strategic and Regulatory Roadblocks

A key strategic risk is the integration of major acquisitions. Verisk is expanding its ecosystem, notably with the pending acquisition of AccuLynx for $2.35 billion. But this deal is already under a Second Request from the Federal Trade Commission (FTC). This regulatory scrutiny can delay integration, increase costs, and potentially force divestitures, which complicates the expected return on investment.

On the external side, the data analytics space is a magnet for regulatory and legal risk. Evolving global data privacy laws, like those governing consumer data, require constant, expensive compliance updates. Verisk is currently involved in various legal proceedings, including Telematics and Data Privacy Litigation, which could have a material adverse effect on their financial position if the outcomes are unfavorable.

Mitigation Actions: Innovation and Discipline

To counter these risks, management is defintely leaning into innovation and cost control. They are pushing the 'Core Lines Reimagined' project, an internal technology overhaul that aims to modernize their platform, increase customer engagement, and ultimately enhance price realization-meaning they can charge more because the product is better.

The integration of Generative AI (Gen AI) is a key part of this, helping to streamline product development and add experiential layers for faster content summarization and natural language querying. This operational discipline is already showing; despite the revenue miss, strong operating leverage helped Q3 Adjusted EBITDA grow 7.2%. You can read more about the company's full financial picture in Breaking Down Verisk Analytics, Inc. (VRSK) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear map of where Verisk Analytics, Inc. (VRSK) goes next, and the answer is simple: deeper into the insurance workflow, driven by data and strategic acquisitions. The company's own revised full-year 2025 guidance points to consolidated revenue between $3.05 billion and $3.08 billion, with diluted adjusted earnings per share (EPS) projected to land between $6.80 and $7.10. That's a solid, high-single-digit growth trajectory, but it's not just about the numbers; it's about the underlying shifts in the business model.

The real story here is the pivot to a more defensible, subscription-based model and a relentless focus on core insurance analytics. Honestly, that recurring revenue is what gives me confidence in their long-term stability. Plus, their strategic initiatives are defintely moving the needle.

The Core Engine: Product Innovation and Recurring Revenue

Verisk's future growth is anchored in making their proprietary data more accessible and valuable, which is a classic data-as-a-service (DaaS) play. A key driver is the ongoing digital transformation in the insurance sector, and Verisk is positioning itself as the essential technology partner.

The company's subscription revenue-which makes up about 83% of total revenue-grew at a strong 10.6% on an organic constant currency basis in the first quarter of 2025, showing strong client adoption. This stability is a massive competitive advantage (a moat, in my old BlackRock days). The product pipeline is focused on two major streams:

• Core Lines Reimagine: This project is overhauling their foundational actuarial and benchmarking tools, leading to faster data delivery and helping sustain pricing power by delivering enhanced value to clients.
• Generative AI (Gen AI) Integration: They are layering Gen AI tools onto their platforms to allow for natural language querying and faster content summarization, which should drive incremental margin expansion by improving efficiency.

Looking ahead, the planned 2026 launch of the cloud-native catastrophe modeling platform, Verisk Synergy Studio, is targeting the estimated $150 billion global catastrophe modeling market and is a clear indicator of their long-term innovation commitment.

Strategic M&A and Market Expansion

Verisk has been disciplined but aggressive with M&A, using acquisitions to immediately expand their product offerings and geographic reach. They are essentially buying their way into faster-growing, adjacent markets and strengthening their core insurance segment.

Here's the quick math on their 2025 acquisition strategy:

These moves are not random; they are focused on enhancing the claims and restoration ecosystem (AccuLynx), diversifying into the life segment (SuranceBay), and strengthening their core risk modeling (Simplitium). This strategy ensures that even as they divest non-core assets, the remaining business is more concentrated and higher-growth.

Durable Competitive Edge

Verisk Analytics, Inc.'s primary competitive advantage is its proprietary data sets and the network effect of its consortiums (contributory data sets). Insurers rely on Verisk's data for everything from underwriting forms to loss costs, and this reliance creates high switching costs for clients. The company's client retention rate was a phenomenal 92% in 2024, which speaks volumes about the stickiness of their product.

They are actively building new consortium databases in areas like anti-fraud and excess and surplus (E&S) lines, which further entrenches them in the industry workflow. This is a classic case of a company that controls the pipes-the data and analytics infrastructure-of a massive, regulated industry. You can learn more about the financial strength backing these growth moves in Breaking Down Verisk Analytics, Inc. (VRSK) Financial Health: Key Insights for Investors.