Verisk Analytics (VRSK): Earnings Rebound, Tight Balance Sheet

A sharp earnings rebound — and an equally sharp balance-sheet story#

Verisk [VRSK] closed FY2024 with net income of $957.5MM, a +55.91% year-over-year rise from $614.4MM in FY2023, and revenue of $2.88B (+7.47% YoY). Those headline numbers create a striking contrast with the company’s year-end balance sheet: total assets of $4.26B against total liabilities of $4.16B, leaving total stockholders’ equity of only $100.1MM as of 2024-12-31 (filing date 2025-02-26). That juxtaposition — strong cash generation and profitability on one hand, compressed equity and elevated leverage on the other — is the dominant narrative for Verisk heading into the next reporting cycle.

The earnings recovery is real and cash-backed. Operating cash flow in FY2024 was $1.14B, and free cash flow was $920.1MM, which translates to an operating-cash-flow margin of +39.58% and a free-cash-flow margin of +31.95% on 2024 revenue. At the same time, the company returned substantial capital to shareholders: $1.05B of share repurchases in 2024 and $221.3MM of dividends paid, continuing a multiyear pattern of aggressive buybacks that compressed equity and materially altered capital structure.

Those actions leave measurable leverage and liquidity implications. Using year-end reported net debt of $2.95B and FY2024 EBITDA of $1.66B, Verisk’s net-debt-to-EBITDA computes to ~1.78x. Calculated enterprise value (market cap $36.71B + net debt $2.95B) implies an EV/EBITDA around 23.9x on FY2024 results. Meanwhile, the snapshot current ratio based on FY2024 current assets ($911.6MM) and current liabilities ($1.24B) is ~0.74x, a clear liquidity metric divergence from some reported TTM ratios. We flag these differences and explain our prioritization below.

Financial performance: growth, margins and cash quality#

Verisk’s top-line progression from FY2021 through FY2024 shows steady, single-digit organic growth: revenues rose from $2.46B (2021) to $2.88B (2024), a three-year compound annual growth rate of ~5.35%. The more notable move was profitability: operating income recovered to $1.25B in 2024 yielding an operating margin of ~43.4%, and net margin expanded to ~33.3% driven by a combination of revenue growth, operating leverage, and favorable items (including tax and other components captured in net income).

Quality of earnings checks show alignment between reported profit and cash generation. Net income of $957.5MM sat alongside $1.14B of operating cash flow and $920.1MM of free cash flow — an encouraging conversion rate that suggests underlying earnings are supported by real cash. Depreciation and amortization of $305.9MM is a notable non-cash add-back but well-covered within operating cash and free cash flow metrics. The company also sustained a strong adjusted EBITDA level of $1.66B in FY2024, supporting interest coverage and deleveraging capacity.

Nevertheless, the balance sheet movements complicate the earnings story. Over the past three fiscal years Verisk has been a very active repurchaser of stock (common stock repurchased: $475MM in 2021, $1.66B in 2022, $2.8B in 2023, and $1.05B in 2024). Cumulatively, that is roughly $5.985B of repurchases across 2021–2024. Those buybacks have materially reduced shareholder equity while retained earnings increased, leaving total stockholders' equity notably compressed. The result is mathematically elevated return-on-equity metrics and greater sensitivity of book equity to future shocks.

Income statement trend (selected items)#

(Income statement line items are taken from annual filings; percentages and computations in-text are recalculated from these figures.)

The pattern shows Verisk can expand margins materially when revenue growth and cost control align. However, 2022’s exceptionally high operating margin (56.33% reported) reflects year-specific items and is not the normal run rate; 2024’s operating margin of ~43.5% is the more sustainable baseline given the company’s cost structure and investments.

Balance sheet and capital allocation: buybacks, debt and the equity compression effect#

Verisk’s balance sheet at year-end 2024 is the structural story investors must confront. Key snapshots: cash and cash equivalents $291.2MM, total assets $4.26B, total liabilities $4.16B, total stockholders’ equity $100.1MM, long-term debt $2.71B, and total debt $3.25B. Net debt (total debt minus cash) is $2.95B. Those figures produce several concrete, revisable ratios: net-debt-to-EBITDA ~1.78x, price/earnings ~40.8x (price $262.77 / EPS $6.44), enterprise-value/EBITDA ~23.9x, and dividend yield ~0.64% (dividend per share $1.68 / price $262.77).

It is important to highlight and resolve conflicting metrics in the dataset. Some TTM ratios supplied in the material show a current ratio of 1.53x and debt-to-equity presented inconsistently. For liquidity and leverage analysis we prioritize the point-in-time year-end balance sheet values (as of the FY2024 filing) because they reflect the aggregate of repurchases, debt issuance/repayments, and cash positions at a concrete cut-off. Using those year-end numbers yields a current ratio of ~0.74x (current assets $911.6MM / current liabilities $1,240MM), which is materially weaker than the TTM figure and signals near-term working-capital tightness if no intra-period cash inflows alleviate the shortfall.

The equity compression to $100.1MM is a function of asset-liability parity after cumulative buybacks and returns of capital. That compression mechanically inflates accounting returns such as return-on-equity; for example, FY2024 reported net income divided by year-end equity implies an ROE well in excess of conventional ranges (a distorted, non-economic metric in this context). Investors should therefore treat headline ROE percentages with caution and instead focus on cash-generation, net-debt-to-EBITDA dynamics and the company’s ability to service debt and sustain investment.

Balance sheet trend (selected items)#

(Values reflect year-end balance sheet line items reported in annual filings.)

Capital allocation has been weighted to buybacks and dividends, with cumulative repurchases across 2021–2024 of roughly $5.99B. That level of return-of-capital has a clear effect on shareholders’ equity and on the firm’s financial flexibility. With net-debt-to-EBITDA below 2x, Verisk retains some headroom for additional M&A or share repurchases, but the compressed equity base increases sensitivity to any future earnings volatility and reduces cushion for large one-time charges or goodwill write-downs.

Strategic context: AccuLynx acquisition and the push from analytics to operational platforms#

Verisk’s strategic direction has moved from pure-play analytics toward integrated operational platforms. Management’s recent purchase of AccuLynx (reported at $2.35B in strategic materials) is emblematic: the company is combining underwriting and catastrophe analytics with contractor-facing workflow software to create a closed-loop claims and restoration ecosystem. That move — bringing contractor network, estimating and scheduling workflows under Verisk’s umbrella — can increase recurring revenue stickiness and create new data flows that improve model calibration and post-loss analytics.

From a capital perspective, the AccuLynx transaction is meaningful relative to Verisk’s balance sheet. A $2.35B outlay (financed by some combination of cash, debt, and equity consideration in acquisition structures) is material versus net debt of $2.95B and the company’s available cash. The acquisition rationale is coherent: vertical integration should generate cross-sell, higher gross margins from software offerings, and richer loss-outcome datasets that feed catastrophe models. However, the payoff depends on execution — preserving AccuLynx growth, avoiding customer churn, and realizing the expected cross-sell lift and cost synergies.

We quantify the potential return mechanics using the company’s own forward projections embedded in analyst estimates. Street estimates embedded in the dataset show FY2025 revenue consensus roughly $3.12B and EPS of $7.01, with longer-term revenue reaching ~$4.02B by 2028 and EPS around $10.31. If those growth trajectories materialize, combined margin expansion and subscription resilience could justify the acquisition economics; conversely, a slowdown in cross-selling or integration friction would stress a balance sheet already affected by substantial repurchases.

Competitive positioning and structural advantages#

Verisk’s competitive moat is anchored in scale, proprietary data, and long-standing relationships with insurers and reinsurers. The integration of catastrophe models, underwriting analytics and now field workflow software differentiates the company from point-solution vendors by offering a one-vendor stack for risk assessment through claims settlement. The strategic thesis is network-driven: embedding AccuLynx contractor workflows into the Verisk ecosystem both creates sticky usage and produces standardized repair and loss outcome data that improves catastrophe-model calibration and pricing accuracy.

This positioning matters in an environment where insurers face rising catastrophe frequency and inflationary pressure on repair costs. Verisk’s product set can be a tool for loss mitigation, portfolio-level stress testing and regulatory reporting. However, competitors — including specialist modeling firms and point-solution claims vendors — will continue to challenge on price and innovation. The key advantage for Verisk is the depth of cross-product data and the ability to monetize insights across underwriting, pricing, and claims operations.

Forward-looking considerations and risks grounded in the numbers#

Several clear, data-backed catalysts and headwinds stand out. On the positive side, Verisk has robust cash generation (free cash flow ~$920.1MM in 2024) and an EBITDA base of $1.66B that can support continued product investment, integration spend for AccuLynx, and measured capital returns. Analyst estimates project revenue and EPS compounding in the years ahead (consensus revenue for 2025 $3.118B, EPS $7.01), which—if realized—would improve leverage metrics and justify the strategic push into operational platforms.

On the risk side, the compressed equity base and historical pace of buybacks leave less buffer for shocks. The year-end current ratio ~0.74x signals working-capital sensitivity and potential short-term liquidity pressure if receivables or other current assets are slower to convert. The accounting distortion in ROE and other leverage ratios (caused by reduced equity) also complicates comparative analysis against peers — investors should focus on cash-flow coverage and net-debt/EBITDA as more reliable gauges of financial health.

Other execution risks include integration of AccuLynx (realizing cross-sell and data-synergy benefits), continued defense against specialized analytics and workflow competitors, and macro sensitivity (reinsurance cycles, catastrophe frequency, inflation-driven claim severity). Management’s history of disciplined M&A and the recurring revenue profile of its software products are favorable offsets, but the near-term capital structure will require careful monitoring.

Key takeaways#

Verisk delivered a demonstrable earnings rebound in FY2024 with net income of $957.5MM and strong cash conversion, but that operating success sits against a materially altered balance sheet. Aggressive buybacks over multiple years reduced shareholder equity to $100.1MM, producing distortions in accounting returns and reducing the balance-sheet buffer for adverse shocks. Net-debt-to-EBITDA at ~1.78x is manageable, and free-cash-flow generation is solid, but short-term liquidity indicated by a year-end current ratio of ~0.74x warrants monitoring.

The strategic pivot toward vertical integration — especially the AccuLynx purchase (reported at $2.35B) — aligns with the firm’s long-term playbook of buying data, workflow and distribution assets that expand addressable markets. The economics of that strategy will hinge on execution: preserving AccuLynx growth, achieving cross-sell penetration, and converting richer data into better-priced risk products without materially degrading cash reserves or increasing leverage above prudent levels.

What this means for investors#

Investors should reconcile two simultaneous truths. First, Verisk’s core business remains highly cash generative with durable recurring revenue and attractive margins: FY2024 free cash flow of $920.1MM and EBITDA of $1.66B underpin real financial flexibility. Second, management’s choice to return large amounts of capital via buybacks compressed book equity and left the firm with a balance sheet that requires active liquidity management, especially given sizable M&A activity.

For stakeholders, the focus should be on forward evidence of integration payoffs (cross-sell traction and incremental recurring revenue from AccuLynx), consistency of cash conversion, and whether the company maintains a conservative net-debt-to-EBITDA posture while pursuing M&A. Monitor quarterly updates for operating-cash-flow trends, working-capital swings that affect the current ratio, and any changes to buyback cadence that would further affect book equity.

Conclusion#

Verisk’s FY2024 results offer a clear, mixed message: operational strength and robust cash generation combined with a capital-allocation posture that has materially reshaped the balance sheet. The company’s strategic shift to own more of the claims-to-restoration workflow (most visibly through the AccuLynx move) is strategically coherent and, if executed well, can enhance recurring revenue and improve model fidelity. At the same time, the compressed equity base and near-term liquidity indicators mean investors must watch execution and cash-management closely. The most important signals in the next several quarters will be cash-flow trends, integration milestones for AccuLynx, and whether management moderates buybacks as it deploys capital into growth and integration.

(All figures and line items cited above are taken from Verisk’s FY2024 annual financial statements and related disclosures: revenue, operating income, net income, balance sheet and cash-flow line items are from the FY2024 filings (fillingDate: 2025-02-26). Forward estimates referenced are those included in the company-linked analyst estimate dataset.)