Verisk Analytics, Inc.

remarks and introductions, I would like to turn the call over to Verisk's Head of Investor Relations, Ms. Stacey Broadbar. Ms. Broadbar, please go ahead.

Thank you, Operator, and good day, everyone. We appreciate you joining us today for a discussion of our third quarter 2025 financial results. On the call today are Lee Schabel, Verisk's President and Chief Executive Officer, and Elizabeth Mann, Chief Financial Officer and Interim Head of Claims. The earnings release referenced on this call, as well as our traditional quarterly earnings presentation and the associated 10Q, can be found in the investor section of our website, Verisk.com. The earnings release has also been attached to an AK that we have furnished to the SEC. A replay of this call will be available for 30 days on our website and by dialing. As set forth in more detail in today's earnings release, I will remind everyone that today's call may include forward-looking statements about Verisk's future performance, including those related to our financial guidance and our recently announced pending acquisition of AccuLinks. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance is contained in our recent SEC filing. A reconciliation of reported and historic non-GAAP financial measures discussed on this call is provided in our AK and today's earning presentation posted on the investor section of our website, Veris.com. However, we are not able to provide a reconciliation of projected adjusted EBITDA and adjusted EBITDA margin for the most directly comparable expected GAAP results. because of the unreasonable effort and high unpredictability of estimating certain items that are excluded from projected non-GAAP adjusted EBITDA and adjusted EBITDA margin, including, for example, tax consequences, acquisition-related costs, gains and losses from dispositions, and other non-recurring expenses, the effect of which may be significant. And now, I'd like to turn the call over to Lee Schabel.

Thanks, Stacey. Good morning, everyone, and thanks for joining us today for our third quarter earnings call. Today, I will provide broad context on the results and allow Elizabeth to go into more detail on the financial review. I will also offer some relevant perspective from recent C-suite meetings with our largest clients. Finally, with AI being a focus for investors in our sector, I will update you on the AI enhancements that we've delivered and are developing for our clients and what we believe AI represents for the industry and for us in the coming years based on extensive engagement with our clients on the topic and ground truth experience from our active AI enhanced solutions. Now let's turn to the third quarter results. Verisk delivered organic constant currency revenue growth of 5.5%, driven by strong subscription revenue growth of 8.7%. This growth compounded on top of the solid growth delivered last year. In the quarter, we experienced an exceptionally low level of severe weather, resulting in a decline in claims assignments across our exactware system. This and other factors drove transactional revenue declines of 8.8% on an OCC basis. Despite the transactional revenue impact, we delivered 8.8% OCC adjusted EBITDA growth with expanded EBITDA margin of 55.8%. Looking at our year-to-date performance, we've delivered 7.1% OCC revenue growth, 9.4% OCC adjusted EBITDA growth, and a 56.3% margin, which reflects the underlying strength and resilience of our business and is fully consistent with our organic guidance for the year. Our strong subscription growth reflects continued strategic engagement with our clients and a much improved dialogue on the value that we are delivering and how we can tailor our solutions to their individual needs. As an example, last month I attended, with several of my direct reports, the CIAB Insurance Leadership Forum in Colorado and hosted 40 strategic client meetings. What we heard consistently from our clients was, One, that they need more data from us to better integrate across their businesses and functions, and they've demonstrated in new solutions like excess and surplus that they're willing to increase their data contributions. Two, a high interest in the AI enhancements that we've developed using our data sets where they can get immediate benefit without heavy investment. And three, strong support for the efficiency-driving multi-partner integrations that we provide in our property estimating solutions and specialty business, and that we are developing in anti-fraud and extreme event solutions. It is for this reason that we remain committed to investing in integrations to deliver value to clients. I'd also highlight three meetings just in the past month with clients where we have not had previous C-suite engagement. These discussions included comprehensive reviews of where we support these clients across underwriting, risk, and claims. But most importantly, our discussion centered around future planning on how we can integrate and augment that support to align with our operating data, AI, and financial objectives, elevating and adapting to how our clients are evolving in this ever-changing environment. In every meeting, the conclusion is that there is more opportunity for us to work together. Concretely, our elevated strategic engagement is leading to more pipeline opportunities, and in fact, 2025 is on track to be our strongest sales year yet, with sales teams across Verisk exceeding an ambitious quota for the second straight year. Digging into our AI strategy further, and given the heightened focus on the topic from investors and analysts, I believe it's important to share a few perspectives on what we are doing and what we've been experiencing. First, AI is top of mind for our clients as well. They've been exploring the technology and its potential and have turned to Verisk as an active partner in helping them evaluate use cases and to support their operational objectives with our data sets and content. Through our strategic engagement, our Chief Information Officer, and Chief Global Data Officer have participated in meetings to help our clients on key issues, including data architecture, vendor management, and governance. Additionally, many of our clients want to understand Verisk's AI investment and deployment strategy so that they can align and prioritize their own investment. This underscores the connection we have to the industry and its support for the fundamental and central utility function we provide by developing and deploying a technology that the industry can benefit from at a much lower cost of ownership and investment. Second, and proceeding from the first, our deployed AI applications have been enthusiastically embraced by our clients. As an example, in ExactExpert, where we utilize AI to advise claims professionals in estimate review, We now have over 40 clients using the solution, including six of the top 10 carriers and year to date sales performance is now more than double original quotas and exact expert can now be further enhanced by exact AI adding gen AI capabilities like photo tagging through a new solution, which launched just this month and already has 273 users, including a top 10 carrier on the development front. We've had very positive reactions to our AI query tools for ClaimSearch and SavIR for regulators, with about half of our 30 SavIR states signed on, allowing our clients to more easily interrogate our data through natural language interfaces. Third, it's all about the data. AI relies on high-quality and usable data to train the models, and I can say with confidence that Verisk's content which includes data, language, analytics, and models, is built upon proprietary data that is not publicly available and is structured, cleansed, vetted, and designed by us to take advantage of the power of AI. Additionally, our clients continue to reinforce the value of our content and the importance of integrating it into their workflows. Our investments in CoreLines Reimagine and the success we've had as demonstrated by our subscription growth is the clearest evidence that our curated datasets remain the fuel that powers insurance analytics. While it is still early, we are experiencing increased usage of our content as the introduction of AI tools in certain of our solutions is making it easier for our clients to interact with, driving value for our clients. Further, we continue to grow the number of contributors to our existing datasets. onboarding 10 new statistical data contributors so far in 2025. Verisk's clients are also actively supporting our new initiatives to build greenfield contributory data sets across anti-fraud and for the excess and surplus lines. Specifically, our new digital media forensics currently has 106 contributors, including five of the top 10 carriers, representing over 600 million digital images. With E&S, insurers are responding positively to our initiative to collect data for this growing market. We began this initiative less than a year ago and have already received commitments and actual data from several companies representing billions of dollars of premium. Our ability to provide analytics on their data and benchmark this data to the admitted market leveraging our statistical data is also driving additional interest and contribution. Fourth, It's not just about AI. While AI is a powerful tool, making the insurance industry better requires human expertise and collaboration. We are connecting ecosystems across the industry that bring material efficiencies and improved data sets to drive better results. Our white space and exact where platforms are compelling models of the value we can deliver to clients across the industry. Fifth, AI is enhancing our own internal processes and product development as we leverage advanced technologies that better ingest and interrogate data to advance our models and analytics. In our extreme events business, we are using the power of AI to simulate globally correlated atmospheric perils with a level of realism and reliability that traditional approaches cannot achieve. Specifically, We are using deep learning AI models to correct biases in raw output of a climate model, ensuring that the frequency and intensity of extreme events align with observed reality. In addition, we're also using generative AI techniques to introduce details that capture the local impact of these large events. In short, our clients are more interested in working with us on AI because of our experience and the economic utility of using our solutions. Our proprietary data is more valuable with increasing AI utilization because of its breadth and usability. Our clients are contributing more data and actively supporting the development of new contributory data sets, demonstrating their commitment to Verisk's partnership. Our growth opportunities are expanding by the rapid adoption of solutions like ExactXpert and the robust pipelines we have across many of our new inventions. We have been investing in these solutions and enhancements for several years while maintaining our strong margin profile. And finally, we believe our long-term growth and margin model is enhanced by the integration of AI into our own processes and across the industry overall. Beneath the near-term light weather impacts reflected in our current quarter's results is clear and unmistakable evidence that our strategic engagement initiatives enhanced go-to-market strategy, and product invention, including AI, are enhancing the value of our data and expanding our growth opportunities. Before I turn the call over to Elizabeth, let me share recent developments on the AccuLynx transaction. FTC approval of the transaction has been delayed. We have received a second request for information, and we continue to have productive engagement with the FTC, working within the conditions of the federal government shutdown. Consequently, we do not expect to realize any material benefit from the pending transaction in 2025 and have removed any operating results from our 2025 guidance. We are proactively engaged with the FTC and continue to believe in the strategic and financial merits of the transaction. With that, I'll turn it over to Elizabeth for the financial review.