01—Abstract
Summary
Summary of the 10-K filed February 28, 2023. Cited figures are marked; the original filing is the authoritative source.
Verisk Analytics, Inc. (NASDAQ: VRSK) reported 2022 revenues of $2,497.0 milliona, up from $2,462.5 million in 2021, and an increase of $34.5 million or 1.4%.
Growth in the Insurance segment was driven by underwriting & rating and claims, with Insurance revenues rising $230.1 millionb or 10.4% to $2,437.0 million. Net income was $954.3 million, compared with $666.3 million in 2021, and was boosted by gains on the sales of its environmental health and safety business and Financial Services segment. Income from continuing operations was $1,042.1 million, and EBITDA was $1,639.8 million, a 65.7% margin, which the company notes was positively affected by those gains.
The company agreed to sell its Energy business to Veritas Capital for $3,100.0 million, plus up to $200 millionc of contingent consideration, and the sale closed on February 1, 2023. Energy results are presented as discontinued operations, and the company recorded a $303.7 million impairment on that business in 2022. Cash from operations was $1,059.0 million, and the company repurchased $1,662.5 million of common stock during 2022.
Total debt was $3,740.0 milliond at December 31, 2022, against a cash balance of $112.5 million on the balance sheet. The filing also highlights ongoing legal matters, including an ERISA class action and privacy-related lawsuits involving Jornaya, and an inquiry by the DOJ and SEC related to the former Financial Services segment.
The company reports that it cannot reasonably estimate liability for these matters at this stage. Post-period, it agreed to acquire Mavera for $29.3 million net cash.
02—Key points
Key Highlights
- Revenue of $2,497.0 million for 2022, up 1.4% from $2,462.5 million; Insurance segment revenue rose 10.4% to $2,437.0 million
- Net income of $954.3 million versus $666.3 million in 2021, driven by gains on dispositions of the environmental health and safety business and Financial Services segment
- Energy business sold to Veritas Capital for $3,100.0 million, closing February 1, 2023, and presented as discontinued operations with a $303.7 million impairment recorded in 2022
- Repurchased $1,662.5 million of common stock in 2022 and paid $195.2 million in dividends
- Operating cash flow of $1,059.0 million, compared with $1,155.7 million in 2021
- Total debt of $3,740.0 million at December 31, 2022, with the Syndicated Credit Facility repaid substantially after year end
- Subscriptions and long-term agreements represented over 81% of 2022 revenues, supporting predictable, prepaid cash flows
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Verisk Analytics kept $0.38.
- Revenue$2.50B100.0%
- Cost of revenue−$824.6M33.0%
- Gross profit$1.67B67.0%
- Operating costs−$265.9M10.6%
- Operating income$1.41B56.3%
- Interest, other & tax−$452.6M18.1%
- Net income$953.9M38.2%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 28, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.50B$2.46B | +1.4% |
| Cost of Revenue | $824.60M$853.70M | −3.4% |
| Gross Profit | $1.67B$1.61B | +4.0% |
| R&D Expenses | $43.10M$47.10M | −8.5% |
| SG&A Expenses | $381.50M$313.20M | +21.8% |
| Operating Expenses | $1.09B$1.55B | −29.7% |
| Operating Income | $1.41B$911.40M | +54.3% |
| Interest Expense | $138.80M$127.00M | +9.3% |
| Net Income | $953.90M$666.20M | +43.2% |
| EPS (Basic) | $6.04$4.12 | +46.6% |
| EPS (Diluted) | $6.00$4.08 | +47.1% |
| Shares Outstanding (Basic) | 157.91M161.84M | −2.4% |
| Shares Outstanding (Diluted) | 158.93M163.34M | −2.7% |
05—Questions
Frequently Asked Questions
How did Verisk's revenue perform in 2022?
Revenues were $2,497.0 million, compared with $2,462.5 million in 2021, an increase of $34.5 million or 1.4%. Dispositions and recent acquisitions reduced net revenues by $93.8 million, and the remaining growth of $128.3 million, or 5.8%, came from the Insurance segment.
What drove the large increase in net income?
Net income was $954.3 million, compared with $666.3 million in 2021. The filing attributes the increase primarily to the net gain from the sale of the environmental health and safety business and the Financial Services segment, which partly offset the 2021 impairment of the Financial Services segment.
What is the status of the Energy business sale?
The sale to Planet Jersey Buyer Ltd., an entity controlled by Veritas Capital, for a purchase price of $3,100.0 million closed on February 1, 2023. The filing notes up to $200.0 million of additional contingent cash consideration and states that the company does not expect any continuing involvement in the business.
How is Verisk returning capital to shareholders?
In 2022 the company repurchased 8,600,963 shares for $1,662.5 million and paid dividends of $0.31 per share each quarter, totaling $195.2 million. As of December 31, 2022, $441.3 million remained available under the repurchase program, and an additional $3.0 billion authorization was approved, effective after the Energy sale closed.
What legal risks does the filing disclose?
The filing discloses an ERISA class action related to the ISO 401(k) plan, data privacy lawsuits involving Jornaya, a putative class action alleging a data breach, and ongoing DOJ and SEC inquiries related to the former Financial Services segment, for which the company has agreed to indemnify TransUnion for certain losses. The company states it cannot reasonably estimate the liability for these matters at this stage.
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