Verisk Analytics (VRSK): Cash-Rich Growth, Compression in Equity — and What It Reveals

Immediate development: FY-2024 results show stronger profits and near‑unit FCF conversion but a compressed equity base#

Verisk [VRSK] closed FY-2024 with revenue of $2.88B (+7.47% YoY) and net income of $958.2M (+55.91% YoY), while free cash flow reached $920.1M, representing +96.73% of reported net income. Those figures reflect both operating leverage in Verisk’s high-margin data business and active capital deployment: the company repurchased $1.05B of stock in 2024 and paid $221.3M in dividends, actions that materially altered shareholders’ equity on the balance sheet (see sources) Verisk Investor Relations, SEC EDGAR.

This juxtaposition — accelerating profit and near‑unit free cash flow conversion on one hand, versus a shrunken reported total stockholders’ equity of $100.1M and an elevated leverage profile on the other — is the single most consequential development for stakeholders today. The headline numbers support the narrative of a highly cash‑generative, subscription-style analytics business. The balance-sheet dynamics, driven by buybacks and accounting movements, raise governance and capital-allocation questions that deserve scrutiny.

Financial performance: what the numbers actually say (calculated from company filings)#

Verisk’s FY income statement and cash-flow statements show a clear pattern: revenue growth was steady, margins expanded, and operating cash flow supported aggressive capital returns. Using the company’s FY-2024 line items, the calculation details below reconcile the headline performance and flag items that require explanation.

Across FY-2024 vs FY-2023, revenue rose from $2.68B to $2.88B, a change of +$0.20B, or +7.47% ((2.88-2.68)/2.68 = +0.0747). Net income increased from $614.6M to $958.2M, a rise of +$343.6M, or +55.91% ((958.2-614.6)/614.6 = +0.5591). EBITDA for FY-2024 was $1.66B, producing an EBITDA margin of 57.64% (1.66/2.88 = +57.64%). Operating income of $1.27B implies an operating margin of 44.10% (1.27/2.88 = +44.10%), and reported net margin is 33.29% (958.2/2.88 = +33.29%). These calculations align closely with the company-provided ratios but are independently derived from the FY-2024 financial statements in the filings SEC EDGAR and investor materials Verisk Investor Relations.

Free cash flow for FY-2024 was $920.1M, and when compared with reported net income of $951.4M in the cash-flow statement this yields a free cash flow conversion ratio of +96.73% (920.1/951.4 = +0.9673). Net cash provided by operating activities was $1.14B, providing comfortable coverage for capex of $223.9M and capital returns.

Table 1 (Income statement selected items, FY-2022 through FY-2024) presents the core trend numbers used throughout this analysis.

Sources: company FY income statements and cash-flow statements filed with the SEC and published on Verisk investor site SEC EDGAR, Verisk Investor Relations.

Balance sheet and leverage: calculations reveal concentrated liabilities and a tiny equity cushion#

Verisk’s year‑end FY-2024 balance sheet shows total assets of $4.26B and total liabilities of $4.16B, leaving total stockholders’ equity of $100.1M. From these raw numbers the company’s equity-to-assets ratio is +2.35% (0.1001/4.26 = +0.0235), and liabilities cover +97.66% of assets (4.16/4.26 = +0.9766). Total debt was $3.25B and cash and equivalents were $291.2M, producing a net debt figure of $2.96B (3.25-0.2912 = 2.9588), which yields net debt / EBITDA = 1.78x (2.9588/1.66 = +1.78x).

Critically, calculating debt-to-equity from the FY-2024 balance sheet produces debt/equity = 32.47x, or +3,247.00% when expressed as a percentage (3.25B / 100.1M = 32.47). This stark leverage multiple contrasts with some summary metrics in the dataset that report a very different debt-to-equity figure (for example, a stated "debtToEquityTTM" of "1099.71%" and a "currentRatioTTM" of "1.53x"). When encountering these conflicting summary figures, I prioritize the raw balance-sheet line items (cash, total debt, and shareholders’ equity) reported in the FY-2024 filings because they are the source-of-record values used to compute ratios. The divergence likely reflects differences in denominator definitions (average equity versus year-end equity), timing, or data aggregation errors in summary feeds; the point remains that the year-end balance sheet displays a very small equity base relative to debt.

Table 2 (Balance-sheet derived ratios and leverage) summarizes the calculations.

Sources: balance-sheet line items for FY-2024 from company filings and investor materials SEC EDGAR, Verisk Investor Relations.

Why the tiny equity number matters (and what caused it)#

A reported total stockholders’ equity of $100.1M on a company producing nearly $1B of net income is unusual for a mature, cash‑generative business. The primary driver is aggressive capital returns combined with accounting effects. In FY-2024 Verisk repurchased $1.05B of common stock and paid $221.3M in dividends, while retained earnings increased from $6.42B to $7.15B. The combination of buybacks and other balance-sheet items (including goodwill/intangibles and treasury stock accounting) materially compresses the book equity line even as retained earnings grow. In short, shareholders received cash, and the accounting capture of that activity is the proximate cause of the slim equity buffer.

This structure has practical consequences: with such a small equity base, standard leverage ratios (debt/equity, equity-to-assets) become extreme and sensitive to small balance-sheet adjustments. Although net-debt/EBITDA of +1.78x indicates manageable cash-serviceability given strong free cash flow, the tiny equity figure amplifies headline leverage multiples and can complicate certain covenant calculations, investor optics, and peer comparisons.

Operational quality and earnings sustainability#

Beyond headline profit growth, the quality of earnings appears strong when cash flow is compared to net income. FY-2024 operating cash flow of $1.14B covers capex, dividends and buybacks with room to spare, and free cash flow conversion of +96.73% indicates the business is converting accounting profits into real cash. This is a hallmark of subscription-heavy analytics firms with low marginal costs once datasets and models are developed.

Margin expansion in FY-2024 — operating margin of +44.10% and EBITDA margin of +57.64% — reflects a combination of pricing power, revenue mix tilted toward higher‑margin offerings, and disciplined cost control. The year-over-year jump in net income (+55.91%) outpaced revenue growth (+7.47%), indicating meaningful operating leverage in play.

However, investors should parse organic versus acquisitive growth. The cash-flow statement shows acquisitions activity and the company’s historical cadence of purchases. While acquisitions can accelerate growth and add differentiated datasets, they also consume cash and introduce integration risk. The FY-2024 data show modest reported acquisitions net of -$18M, but FY-2023 included acquisitions net of +$2.98B — large M&A moves historically support growth but also explain variability in cash used for investing activities and the occasional spike in leverage in prior years Verisk Investor Relations, SEC EDGAR.

Competitive position and moat — reinforced by economics#

Verisk’s economics (high gross and EBITDA margins and strong cash conversion) are consistent with a durable moat built on proprietary datasets, long contract durations and embedded workflows in insurance, energy and financial services. The gross profit of $1.67B on $2.88B revenue gives a gross margin in the high‑50s percentage range, which supports both product investment and margin sustainability.

These metrics align with the company’s strategic pitch: data assets are costly to build but cheap to distribute, and renewals provide predictable revenue. The combination of recurring revenue and regulatory/regulatory-adjacent content also increases switching costs, lending resilience during cyclical insurance market phases.

Competition exists — insurtechs, cloud-native analytics providers, and open-source modeling communities — but the scale and regulatory stickiness of Verisk’s core datasets create high barriers to displacement in many use cases.

Capital allocation: buybacks, dividends and balance-sheet choice#

Verisk’s FY-2024 cash-flow allocation shows clear priorities: substantial buybacks totaling $1.05B, dividends of $221.3M, and capex of $223.9M. These choices are financed from operating cash flow, leaving year-end cash roughly stable at $291.2M.

The near‑unit free cash flow conversion and sustainable operating cash generation provide the flexibility to maintain this mix of returns and reinvestment. At the same time, the accounting outcome is a compressed book equity figure, which alters leverage presentation and investor optics. Management has demonstrated willingness to prioritize buybacks — a choice that materially affects balance-sheet ratios and the reported equity base even as it returns cash to shareholders.

Risk factors grounded in the numbers#

Several measurable risks emerge directly from the financials. First, the business remains tied to the insurance sector, and cyclical soft markets could depress spending on third-party analytics; revenue growth, while positive, is not hyperaccelerating and remains partially dependent on market dynamics. Second, the tiny equity base increases sensitivity to adverse events: a one-off significant charge, a large acquisition made with debt, or a sharp revenue reversal would move leverage metrics rapidly. Third, balance-sheet optics could limit the company’s flexibility to pursue very large acquisitions without changing capital structure.

Operationally, while margins are high today, sustaining them requires continued renewal rates and cross-sell success; any secular shift toward in-house analytics at large carriers or commoditization of certain datasets would pressure pricing and margins over time.

Historical context and patterns of execution#

Looking back across FY-2021 through FY-2024, Verisk has demonstrated a pattern of stable-to-improving margins, consistent free cash flow, and periodic large acquisitions and buybacks. Net income has bounced — notably FY-2022 net income was high at $954.3M, then dipped in 2023 to $614.6M, and recovered in 2024 to $958.2M — reflecting a combination of non-recurring items, acquisition accounting and underwriting-market dynamics that affect clients. The company’s historical EBITDA has remained robust (FY-2022 $1.64B; FY-2023 $1.42B; FY-2024 $1.66B), reinforcing the underlying operating strength of the platform.

Management’s execution on capital allocation is consistent: buybacks have been large and sustained (common stock repurchased of $475M in 2021, $1.66B in 2022, $2.8B in 2023, and $1.05B in 2024 per the cash-flow statement), and dividends have grown gradually with quarterly payments in 2024–2025. This history explains the compressed book equity line while confirming a shareholder-return bent.

What this means for investors (explicit section)#

For stakeholders, the FY-2024 data produce a set of practical implications grounded in cash-flow realities and balance-sheet structure. First, Verisk’s business model is delivering durable cash generation: high margins and near-unit free cash flow conversion mean operating income is translating into deployable cash. Second, the company’s capital-allocation choices — large share repurchases plus a modest dividend — materially reduce book equity and make standard leverage ratios look extreme even though cash-serviceability (net debt/EBITDA) remains moderate at +1.78x. Third, the small equity buffer amplifies downside scenarios: earnings or cash-flow shocks would move leverage quickly, so monitoring covenant language, acquisition size, and any shift in buyback policy is essential.

Put simply, strong cash generation gives management options; the path they choose (buybacks, acquisitions, dividend increases) will determine both financial flexibility and investor perception in the quarters ahead.

Key takeaways (featured‑snippet friendly)#

Verisk delivered FY-2024 revenue of $2.88B (+7.47%), net income of $958.2M (+55.91%), and free cash flow of $920.1M (conversion +96.73%). The company ended FY-2024 with net debt/EBITDA of +1.78x but an unusually low total stockholders’ equity of $100.1M, primarily driven by aggressive buybacks and treasury accounting. These facts together explain why the business looks both cash-strong and—on an equity‑basis—highly leveraged.

Near-term indicators and catalysts to watch#

Monitor three measurable items in upcoming disclosures. First, quarterly organic revenue and renewal metrics will show whether growth is sustainable without M&A. Second, free cash flow and acquisition cadence will indicate whether buybacks continue to be the preferred allocation or whether management shifts toward larger strategic M&A. Third, any movement in the components of shareholders’ equity (treasury stock, accumulated other comprehensive income, and retained earnings) on the balance-sheet notes will clarify whether the compressed equity reflects one‑time items or a structural change.

Earnings-per-share beats in 2025 quarters (for example 2025-07-30 actual EPS 1.88 vs est. 1.78) show steady operational execution, but the interplay between EPS growth and shrinking share count is precisely why the equity base requires careful reading in the notes Verisk Investor Relations.

Balanced conclusion: durable cash engine, but balance-sheet optics demand active scrutiny#

Verisk [VRSK] presents a clear operating story: high-margin analytics, strong recurring economics, and excellent free cash flow conversion. Those characteristics underpin the business’s ability to invest, return capital, and sustain margins. At the same time, the FY-2024 balance sheet displays an unusually small reported equity base driven by sustained buybacks and accounting flows, which amplifies leverage multiples and sensitivity to shocks. Investors and stakeholders should therefore evaluate two linked dimensions in future quarters: the sustainability of organic growth and renewal metrics that underpin margins, and management’s capital-allocation choices that shape balance-sheet resilience.

All numerical calculations above are derived from the company’s FY-2024 and comparative FY financial statements and cash-flow reports as published through corporate filings and investor materials Verisk Investor Relations, SEC EDGAR.

What to watch next (data-driven checklist)#

Watch upcoming quarterly releases for: (1) organic revenue/renewal disclosure and segment detail, (2) free cash flow and capex cadence, and (3) any shifts in buyback pace or equity-accounting notes that explain changes in reported shareholders’ equity. These items will materially affect how the market prices both the growth durability and the financial‑risk profile of Verisk in the next 12 months.