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Verisk's (VRSK) Q2 Earnings Beat Estimates, Increase Y/Y

·4 min read

Verisk Analytics, Inc. VRSK reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share (excluding 29 cents from non-recurring items) of $1.53 beat the consensus mark by 7.8% and grew 30.8% on a year-over-year basis. The upside was backed by organic growth within the business, lower provision for income taxes, decreased interest expenses and a fall in average share count.

Revenues of $746.3 million beat the consensus estimate by 0.1% but decreased 0.2% year over year on a reported basis and 5.3% on an organic constant-currency (cc) basis. The decline in revenues was primarily due to the sale of environmental health and safety business (3E) and Verisk Financial Services.

Over the past year, shares of Verisk have improved 0.8% against the 15.1% decline of the industry it belongs to.

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Segmental Performance

Insurance segment revenues totaled $610 million, up 10.9% year over year on a reported basis and 6.4% on an organic cc basis.

Within the segment, underwriting and rating revenues of $437.8 million rose 12.8% on a reported basis and 7.1% on an organic cc basis. The upside was primarily driven by an annual increase in prices derived from the continued enhancements of the content of solutions within our industry-standard insurance programs as well as the sale of expanded solutions to the existing customers in commercial and personal lines. In addition, extreme event and life solutions  contributed to growth.

Claims revenues amounted to $172.2 million, improving 6.5% on a reported basis and 4.7% on an organic cc basis. The top line was primarily driven by claims analytics revenues and property estimating solutions.

The Energy and Specialized Markets segment’s revenues of $133.5 million decreased 17.7% year over year on a reported basis but increased 0.8% on an organic cc basis. The fall in revenues was primarily due to the sale of the 3E business that closed on Mar 11, 2022, and the suspension of commercial operations in Russia. However, organic cc growth was driven by modest growth in research revenues.

The Financial Services segment’s revenues of $2.8 million fell 92.1% year over year. Verisk had closed the sale of Verisk Financial Services on Apr 8, 2022.

Operating Results

Adjusted EBITDA of $380.8 million increased 2.7% on a reported basis and 4.4% on an organic cc basis. Adjusted EBITDA margin rose to 51% from 49.6% in the prior-year quarter.

Verisk Analytics, Inc. Price, Consensus and EPS Surprise

Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Verisk Analytics, Inc. Price, Consensus and EPS Surprise

Verisk Analytics, Inc. price-consensus-eps-surprise-chart | Verisk Analytics, Inc. Quote

Balance Sheet and Cash Flow

Verisk exited second-quarter 2022 with cash and cash equivalents of $480.7 million compared with $397.9 million at the end of the prior-year quarter. Long-term debt was $2.34 billion, flat with the prior-year quarter’s level.

Verisk generated $130.2 million of cash from operating activities while capex was $69.2 million. Free cash flow was $61 million.

Share Repurchase & Dividend Payout

During the June quarter, Verisk paid out a total cash dividend of $49.2 million.

In the reported quarter, VRSK bought back 1.6 million shares at an average price of $208.18 for a total cost of $325 million for the second quarter of 2022. As of Jun 30, 2022, VRSK had $707.5 million remaining under its share repurchase authorization.

Currently, Verisk carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performances of Some Other Business Services Companies

Equifax EFX reported mixed second-quarter 2022 results, wherein earnings beat estimates but revenues missed the same.

EFX’s adjusted earnings of $2.09 per share beat the Zacks Consensus Estimate by 3% and improved 5.6% on a year-over-year basis. Revenues of $1.32 billion missed the consensus estimate marginally but improved 6.6% year over year.

IQVIA Holdings IQV reported solid second-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

IQV’s adjusted earnings per share of $2.44 beat the consensus mark by 2.1% and improved 15% on a year-over-year basis. Total revenues of $3.54 billion outpaced the consensus estimate by 1.2% and increased 3% year over year.

Omnicom Group OMC reported impressive second-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

OMC’s earnings of $1.68 per share beat the consensus mark by 7.7% and increased 15.1% year over year, driven by a strong margin performance. Total revenues of $3.6 billion surpassed the consensus estimate by 4.4% but declined slightly year over year.


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