Insurance data analytics provider Verisk Analytics (NASDAQ:VRSK) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 5.9% year on year to $768.3 million. The company’s full-year revenue guidance of $3.07 billion at the midpoint came in 1.7% below analysts’ estimates. Its non-GAAP profit of $1.72 per share was 1% above analysts’ consensus estimates.
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Verisk (VRSK) Q3 CY2025 Highlights:
- Revenue: $768.3 million vs analyst estimates of $776.8 million (5.9% year-on-year growth, 1.1% miss)
- Adjusted EPS: $1.72 vs analyst estimates of $1.70 (1% beat)
- Adjusted EBITDA: $429.1 million vs analyst estimates of $431.3 million (55.9% margin, 0.5% miss)
- The company dropped its revenue guidance for the full year to $3.07 billion at the midpoint from $3.11 billion, a 1.4% decrease
- Management reiterated its full-year Adjusted EPS guidance of $6.90 at the midpoint
- EBITDA guidance for the full year is $1.71 billion at the midpoint, below analyst estimates of $1.74 billion
- Operating Margin: 45%, up from 42.9% in the same quarter last year
- Constant Currency Revenue rose 5.5% year on year (6.8% in the same quarter last year)
- Market Capitalization: $28.99 billion
StockStory’s Take
Verisk’s third quarter results fell short of Wall Street’s revenue expectations, prompting a significant negative market reaction. Management attributed the softer performance primarily to historically low levels of severe weather, which reduced demand for claims-related transactional services, and the impact of a reduced government contract. CEO Lee Shavel noted, “This and other factors drove transactional revenue declines,” emphasizing that the underlying subscription revenue growth remained strong. Despite these headwinds, Verisk expanded its operating margin and continued to invest in its data and AI capabilities, which management believes underpin the company’s long-term resilience.
Looking forward, Verisk’s guidance reflects both temporary and structural shifts in its operating environment. The company expects light weather activity and tough year-over-year comparisons to continue affecting claims-related revenue in the near term, while the removal of AccuLynx acquisition benefits from guidance has tempered full-year expectations. Management remains focused on expanding its subscription base, advancing new AI-powered products, and deepening client integration. As CFO Elizabeth Mann stated, “We remain committed to delivering results in line with our long-term target for this year, for 2026 and beyond,” highlighting confidence in ongoing strategic initiatives despite near-term variability.
Key Insights from Management’s Remarks
Verisk’s management cited weather-driven declines in transactional revenue, robust subscription growth, and ongoing investment in AI and client integration as key themes for the quarter and outlook.
- Subscription revenue growth: The company’s core subscription business, representing 84% of total revenue, grew 8.7% year over year, reflecting strong client engagement and expansion of data-driven solutions across underwriting and claims. Management underscored successful price realization and new module launches, especially within the Reimagine program, which aims to accelerate client access to actionable insights.
- Weather impact on transactions: Exceptionally low severe weather activity led to an 8.8% decline in transactional revenue, particularly in Property Estimating Solutions. This reduction was compounded by a tough comparison to the prior year’s weather-related claims volumes, which drove variability in quarter-over-quarter performance.
- AI-enabled product adoption: AI-powered offerings such as XactXpert and XactAI gained momentum, with over 40 clients now using AI-assisted claims review tools and rapid uptake among large insurers. These tools are designed to improve operational efficiency and drive upsell opportunities, positioning Verisk as a partner in clients’ digital transformations.
- Data ecosystem expansion: Verisk increased the number of contributors to its statistical databases, with new initiatives in anti-fraud and excess and surplus lines. The company highlighted the rapid onboarding of contributors to digital media forensics, supporting future product development and analytics capabilities.
- AccuLynx acquisition delay: The pending AccuLynx deal remains under FTC review, with no material financial benefit expected in 2025. Management reiterated its strategic rationale for the transaction but has removed related revenue and earnings contributions from current forecasts.
Drivers of Future Performance
Verisk’s guidance for the remainder of the year is shaped by lighter weather impacts, the ongoing shift toward subscription-based revenues, and continued investment in AI-enabled solutions.
- Subscription growth focus: Management expects continued client migration to data-driven subscription products, supported by new product launches and enhanced integration capabilities. This transition is aimed at reducing revenue volatility and driving more predictable growth, even as claims-related transaction volumes fluctuate due to weather variability.
- AI investment and adoption: The rollout of AI-powered analytics in core platforms is expected to improve operational efficiency for clients and provide incremental upsell opportunities. Management believes that broader adoption of these solutions will support margin expansion and reinforce Verisk’s competitive differentiation.
- AccuLynx and regulatory headwinds: The absence of AccuLynx revenues from guidance and regulatory delays remain near-term headwinds. In addition, management flagged ongoing softness in the Personal Lines Auto segment due to competitive pressures, which could limit growth in select areas.
Catalysts in Upcoming Quarters
As we look ahead, the StockStory team will be watching (1) the pace of client adoption for new AI-powered analytics and subscription products, (2) the resolution and timing of the AccuLynx acquisition and any regulatory updates, and (3) signs of stabilization in the Personal Lines Auto segment amid ongoing competitive pressures. Execution on product launches and the ability to convert sales momentum into revenue will also be critical signposts for Verisk’s trajectory.
Verisk currently trades at $206, down from $232.21 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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