01—Abstract
Summary
Summary of the 10-K filed February 21, 2024. Cited figures are marked; the original filing is the authoritative source.
Verisk Analytics, Inc. (NASDAQ: VRSK) reported 2023 revenues of $2,681.4 milliona, up from $2,497.0 million in 2022, an increase of $184.4 million or 7.4%.
Revenue growth came from the Insurance segment, which the company now reports as its only segment following the February 1, 2023 sale of its Energy business to Veritas Capital for a net cash sale price of $3,066.4 millionb. Net income attributable to Verisk was $614.6 million in 2023 compared with $953.9 million in 2022, a decline driven mainly by the prior-year gains on dispositions and a $38.2 million litigation reserve expense tied to an indemnification of an inquiry related to the former Financial Services segment. EBITDA margin was 53.1% in 2023 versus 65.7% in 2022.
Cash flow remained strong, with net cash provided by operating activities of $1,060.7 millionc. The company returned substantial capital to shareholders: it repurchased $2,762.3 million of common stock and paid $196.8 million in dividends during 2023. Total debt, excluding finance leases, fell to $2,850.0 million from $3,740.0 million at year-end 2022, as the company repaid revolving and bilateral credit facility borrowings and issued $500.0 million of 5.75% senior notes due 2033.
As of December 31, 2023, $641.5 milliond remained available under the repurchase authorization. Subsequent to year-end, the Board approved a $0.39 per share quarterly dividend and an additional $1,000.0 million share repurchase authorization.
The company also noted several risks, including a large share of revenue from U.S. P&C primary insurers (approximately 69% of 2023 revenue), exposure to generative AI and cybersecurity threats, and pending litigation, including a Daniel's Law claim and a data privacy suit. Management reported that its internal control over financial reporting was effective as of December 31, 2023, with Deloitte & Touche LLP providing an unqualified opinion.
02—Key points
Key Highlights
- Revenues rose 7.4% to $2,681.4 million, with the Insurance segment growing 10.0% to $2,681.4 million and underwriting revenues up 9.1%.
- Net income attributable to Verisk was $614.6 million, down from $953.9 million in 2022, reflecting prior-year disposition gains and a $38.2 million litigation reserve expense in 2023.
- EBITDA margin declined to 53.1% from 65.7%, primarily due to dispositions in the prior year and the current-year litigation reserve.
- The Energy business sale closed February 1, 2023 for a net cash sale price of $3,066.4 million, generating a $128.4 million loss at closing.
- Share repurchases totaled $2,762.3 million in 2023, and total debt was reduced to $2,850.0 million from $3,740.0 million.
- Operating cash flow was $1,060.7 million, broadly flat versus $1,059.0 million in 2022.
- Approximately 69% of 2023 revenue came from solutions provided to U.S. P&C primary insurers, a concentration the company identifies as a key risk.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Verisk Analytics kept $0.23.
- Revenue$2.68B100.0%
- Cost of revenue−$876.5M32.7%
- Gross profit$1.80B67.3%
- Operating costs−$673.2M25.1%
- Operating income$1.13B42.2%
- Interest, other & tax−$517.1M19.3%
- Net income$614.6M22.9%
Where FY2023 revenue went
$2.68B- Cost of revenue: $876.5M, 33% of revenue
- Net income: $614.6M, 23% of revenue
- Interest, other & tax: $517.1M, 19% of revenue
- SG&A: $391.8M, 15% of revenue
- R&D: $36.8M, 1.4% of revenue
- Other operating costs: $244.6M, 9.1% of revenue
Kept 23% as net incomeR&D $36.8M · 1.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 21, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $2.68B$2.50B | +7.4% |
| Cost of Revenue | $876.50M$824.60M | +6.3% |
| Gross Profit | $1.80B$1.67B | +7.9% |
| R&D Expenses | $36.80M$43.10M | −14.6% |
| SG&A Expenses | $391.80M$381.50M | +2.7% |
| Operating Expenses | $1.55B$1.09B | +42.1% |
| Operating Income | $1.13B$1.41B | −19.5% |
| Interest Expense | $115.50M$138.80M | −16.8% |
| Net Income | $614.60M$953.90M | −35.6% |
| EPS (Basic) | $4.19$6.04 | −30.6% |
| EPS (Diluted) | $4.17$6.00 | −30.5% |
| Shares Outstanding (Basic) | 146.62M157.91M | −7.1% |
| Shares Outstanding (Diluted) | 147.34M158.93M | −7.3% |
05—Questions
Frequently Asked Questions
How did Verisk's revenue and profitability change in 2023?
Revenues increased 7.4% to $2,681.4 million from $2,497.0 million. Net income attributable to Verisk fell to $614.6 million from $953.9 million, mainly because 2022 included gains from dispositions and 2023 included a $38.2 million litigation reserve expense. EBITDA margin decreased to 53.1% from 65.7%.
What drove the decline in net income?
The prior year included a net gain from the sales of 3E and the Financial Services segment, which did not recur. The current year also included a litigation reserve expense of $38.2 million tied to an indemnification of an inquiry related to the former Financial Services segment, which the company expects to be mostly non-deductible for tax purposes.
How much capital did Verisk return to shareholders?
In 2023, Verisk repurchased $2,762.3 million of common stock and paid $196.8 million in dividends. The company also repurchased 12,849,921 shares during the year, and $641.5 million remained available under its repurchase authorization at year-end. After year-end, the Board approved an additional $1,000.0 million repurchase authorization and a $0.39 per share dividend.
What is the company's debt position?
Total debt, excluding finance lease obligations, unamortized discounts and premium, and debt issuance costs, was $2,850.0 million at December 31, 2023, compared with $3,740.0 million a year earlier. The company issued $500.0 million of 5.75% senior notes due 2033 and used the proceeds, along with Energy sale proceeds, to pay down its revolving credit facility. The $1,000.0 million Syndicated Credit Facility had $995.4 million of available capacity at year-end.
What are the main risks highlighted in the filing?
Key risks include dependence on U.S. P&C primary insurers, which accounted for approximately 69% of 2023 revenue; competition; potential loss of data sources; cybersecurity and privacy breaches; the effect of generative AI on demand for existing products; and pending litigation, including a Daniel's Law claim and a privacy class action. Management also reported that its internal control over financial reporting was effective as of December 31, 2023.
06—Continue