Verisk Analytics, Inc. · NASDAQ:VRSK
Verisk Analytics — CECP CEO Investor Forum 2020
40 slides from Verisk Analytics's conference presentation, Feb 24, 2020
Slide 1: Verisk Analytics
Verisk Analytics Scott Stephenson Chairman, President, and Chief Executive Officer CECP CEO Investor Forum February 24, 2020 © 2020 Verisk Analytics, Inc. All rights reserved. 1
Slide 2: Forward-Looking Statements, Safe Harbor, and Non-GAAP Financial Measures
CECP CEO Investor Forum Presentation Forward-Looking Statements, Safe Harbor, and Non-GAAP Financial Measures Forward-Looking Statements This release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks,
Slide 3: Agenda
I. Company Overview II. Strategy and Long-Term Value Creation III. Measuring Results and Outcomes © 2020 Verisk Analytics, Inc. All rights reserved. 3
Slide 4: Company Overview
Company Overview © 2020 Verisk Analytics, Inc. All rights reserved. 4
Slide 5: A Leading Data Analytics Partner to Our Customers
CECP CEO Investor Forum Presentation A Leading Data Analytics Partner to Our Customers Insurance Energy Financial Services We help our customers • Assess and price risk with more • Manage risk across the natural resources • Identify fraud and abuse accuracy value chain • Manage regulatory and • Impr
Slide 6: Financially Sound, Data Rich, and Global
CECP CEO Investor Forum Presentation Financially Sound, Data Rich, and Global 1971Founded $27B Market cap 19PB of information in our data stores 30 Countries and growing ~9,300 Passionate employees © 2020 Verisk Analytics, Inc. All rights reserved. 6
Slide 7: Purpose
CECP CEO Investor Forum Presentation Purpose We help customers make crucial decisions every day about risk, investments, and operations—with greater precision, efficiency, and discipline—that affect millions of lives and tens of thousands of businesses around the world. The Verisk Way: Our Guiding P
Slide 8: Our Story of Growth and Innovation
CECP CEO Investor Forum Presentation Our Story of Growth and Innovation 2020 Global leader in innovative 2009 data analytics For-profit 1997 transition U.S. insurance 1971 advisory rating organization 2015 2019 2012 2006 Energy Entry Financial Into life services intelligence insurance 1998 analytics
Slide 9: Our Distinctives
CECP CEO Investor Forum Presentation Our Distinctives What Sets Us Apart and Guides Our Company Unique Deep Domain Deep Integration Steady Stream Data Assets Expertise into Customer of First-to-Market Workflows Innovations © 2020 Verisk Analytics, Inc. All rights reserved. 9
Slide 10: Strategy and Long-Term Value Creation
Strategy and Long-Term Value Creation © 2020 Verisk Analytics, Inc. All rights reserved. 10
Slide 11: Strategy for Growth
CECP CEO Investor Forum Presentation Strategy for Growth Increase Solution Develop New Leverage Our Pursue Strategic Penetration Proprietary Data Sets Intellectual Capital Acquisitions We help our customers improve operations, decisions, and performance. © 2020 Verisk Analytics, Inc. All rights rese
Slide 12: Work with Purpose: Protecting People, Property, and Financial Assets Around the World
CECP CEO Investor Forum Presentation Work with Purpose: Protecting People, Property, and Financial Assets Around the World Building code assessment Community fire Extreme event and and mitigation protection catastrophe models Cyber risk solutions Fraud Smart regulation © 2020 Verisk Analytics, Inc.
Slide 13: Capitalizing on Megatrends That Affect Our Business
CECP CEO Investor Forum Presentation Capitalizing on Megatrends That Affect Our Business Increasing Demand for Automation Energy Transition Outlook: Data Analytics Scalability Challenge © 2020 Verisk Analytics, Inc. All rights reserved. 13
Slide 14: Increasing Demand for Data Analytics
CECP CEO Investor Forum Presentation Increasing Demand for Data Analytics The Cost of Being Top 4 Benefits “Data Analytic” 25% 1999 2019 17% 13% 12% Cost of 1 PB of storage ~$8,000,000 ~$50,000 Cost of human to make ~$80,000 ~$500,000 Data Administrator Data Scientist Faster Improved More Product/ d
Slide 15: Our Talent: A Foundation for Growth and Innovation
CECP CEO Investor Forum Presentation Our Talent: A Foundation for Growth and Innovation Global Reach and Headcount Our People Generation • Actuaries • Engineers 28% 33% • Chemists and • Geologists 2017 physicists 72% 2019 • Insurance experts 5% 45% • Commercial 67% bankers and • Meteorologists GEN Z
Slide 16: Building Careers, Not Jobs
CECP CEO Investor Forum Presentation Building Careers, Not Jobs Specialty Programs Leadership EXECUTIVES Excellence Program 205 (since 2014) Data Science Excellence Program SENIOR Experienced MANAGERS Leader Program Data Analytics Certification 671 (since 2018) (Coursera/Johns Hopkins) NEWER Foundat
Slide 17: Capitalizing on Megatrends That Affect Our Business
CECP CEO Investor Forum Presentation Capitalizing on Megatrends That Affect Our Business Increasing Demand for Automation Energy Transition Outlook: Data Analytics Scalability Challenge © 2020 Verisk Analytics, Inc. All rights reserved. 17
Slide 18: Four Factors Putting Pressure on Insurers
CECP CEO Investor Forum Presentation Automation Four Factors Putting Pressure on Insurers Evolving demographic of insurance buyer Millennials now the largest generation >75% of policyholders prefer applying online and expect an “Amazon-like” experience Aging insurance workforce 400,000 of the 1.4M p
Slide 19: Our Automated Underwriting Solution
CECP CEO Investor Forum Presentation Our Automated Underwriting Solution Our Approach LightSpeed Quote 3 2 Verified Process questions minutes Sale 50% to 85% boost in conversion rates Current Approach Typical Initial Quote Process 10-35 questions 35 minutes Quote verification needed 45% of prospects
Slide 20: Capitalizing on Megatrends That Affect Our Business
CECP CEO Investor Forum Presentation Capitalizing on Megatrends That Affect Our Business Increasing Demand for Automation Energy Transition Outlook: Data Analytics Scalability Challenge © 2020 Verisk Analytics, Inc. All rights reserved. 20
Slide 21: Energy Transition Outlook: The Scalability Challenge
CECP CEO Investor Forum Presentation Energy Transition Outlook: The Scalability Challenge 2040 the energy transition becomes reality What does this This of global power needs will be could mean for ~25% met by solar and wind happen faster companies of all new vehicle sales will and 35% use electric
Slide 22: Helping Customers Navigate the Energy Transition
CECP CEO Investor Forum Presentation Helping Customers Navigate the Energy Transition Accelerated Energy Transition Outlook Energy Transition Service 18,000 16,000 • Leverages our entire commodity 14,000 platform 12,000 • Delivers integrated energy market 10,000 Mtoe research underpinned by extensiv
Slide 23: Our Commitment to Environmental Responsibility
CECP CEO Investor Forum Presentation Our Commitment to Environmental Responsibility For two consecutive years, we’ve balanced 100% of our Scope 1 and 2 emissions, and 100% of our Scope 3 business air travel, by investing in renewable energy certificates and carbon offsets. SCOPE 1 Mobile Stationary
Slide 24: Always on Our Minds
CECP CEO Investor Forum Presentation Always on Our Minds Cloud Migration Data Security / Tokenization Regulatory Environment Ethical Machine Learning © 2020 Verisk Analytics, Inc. All rights reserved. 24
Slide 25: Capital Management Philosophy
CECP CEO Investor Forum Presentation Capital Management Philosophy Focused on value creation and improving ROIC • Understand and optimize operating capital generation • Identify internal and external investment opportunities • Compare estimated returns on invested capital relative to risk-weighted W
Slide 26: Our Strategic Planning and Long-Term Financial Targets
CECP CEO Investor Forum Presentation Our Strategic Planning and Long-Term Financial Targets ORGANIC REVENUE GROWTH 1. Define 7–8% on average, over time business strategy 6. Present 2. Assess macro to BOD and competitive environment ORGANIC EBITDA GROWTH 1–2 pts faster than revenue growth 5. Devise 5
Slide 27: Governance
CECP CEO Investor Forum Presentation Governance Quantitative, transparent, performance-based, and aligned with stakeholders Short-Term Incentive Long-Term Incentive As of 2018 As of 2018 CEO Other Named Officers Named Officers 20% 25% 40% 50% 50% 50% 40% 25% Adjusted organic revenue targets Adjusted
Slide 28: Governance
CECP CEO Investor Forum Presentation Governance Board Diversity 2020 33% of current directors Insurance Energy Financial Services Technology are women 2009 new Insurance 4 directors in past 5 years © 2020 Verisk Analytics, Inc. All rights reserved. 28
Slide 29: Measuring Results and Outcomes
Measuring Results and Outcomes © 2020 Verisk Analytics, Inc. All rights reserved. 29
Slide 30: Long-Term Sustainable Growth
CECP CEO Investor Forum Presentation Long-Term Sustainable Growth1,2,3 Total Organic Revenue Revenue $ % Growth Normalized Organic Constant Currency3 8.5% 8.0% 7.8% 7.8% 7.7% 7.2% 6.9% 7.1% 6.7% 5.6% 5.8% 4.6% 4.2% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. Organic growth in
Slide 31: High-Quality Recurring Revenue across a Diversified Solution Set
CECP CEO Investor Forum Presentation High-Quality Recurring Revenue across a Diversified Solution Set Revenue – Segment Breakdown Revenue – Subscription vs. Non-Subscription $2.0B $2.1B $2.4B $2.6B $2.0B $2.1B $2.4B $2.6B 7% 7% 7% 7% 22% 21% 22% 22% 16% 19% 20% 19% 71% 72% 71% 71% 84% 81% 80% 81% 20
Slide 32: Solid Profitability Growth
CECP CEO Investor Forum Presentation Solid Profitability Growth1,2 Adjusted EBITDA EBITDA $ % Growth 12% CAGR 23.4% 19.6% 15.3% 16.4% 11.0% 12.0% 12.8% 11.1% 7.2% 9.4% 9.1% 8.3% 3.8% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. Figures exclude discontinued operations. 2. Adjus
Slide 33: Healthy Margin Profile
CECP CEO Investor Forum Presentation Healthy Margin Profile Adjusted EBITDA 1,2 Adjusted EBITDA Margins 1,2 $1,130M $1,224M $998M $1,036M 50.0% 48.3% 47.2% 47.0% 2016 2017 2018 2019 2016 2017 2018 2019 Capital Expenditures as a % of Revenue 1 Free Cash Flow 1,3 8.6% 9.6% $740M 7.3% 8.3% $703M $510M
Slide 34: Ten Years of Growth: Verisk Stock Outperforms the S&P 500
0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00 400.00 450.00 500.00 550.00 600.00 650.00 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 CECP CEO Investor Forum Presentation Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Verisk Analytics Jan-
Slide 35: A Differentiated Business Model
CECP CEO Investor Forum Presentation A Differentiated Business Model • Unique and defensible data sets • Substantial growth opportunities capitalizing on megatrends across verticals • Stable subscription revenue base with established organic growth record • Scaled business model with leading margins
Slide 36: Appendix: Non-GAAP Reconciliations
Appendix: Non-GAAP Reconciliations © 2020 Verisk Analytics, Inc. All rights reserved. 36
Slide 37: Non-GAAP Reconciliations
CECP CEO Investor Forum Presentation Non-GAAP Reconciliations Specified Metrics The company has provided certain non-GAAP financial information as supplemental information regarding its operating results. These measures are not in accordance with, or an alternative for, U.S. GAAP and may be differen
Slide 38: Non-GAAP Reconciliations
CECP CEO Investor Forum Presentation Non-GAAP Reconciliations Adjusted EBITDA 2019 2018 2017 2016 2015 2014 2013 Net income $449.9M $598.7M $555.1M $591.2M $507.6M $400.0M $348.4M Depreciation and amortization of fixed assets 185.7M 165.3M 135.6M 119.1M 96.6M 65.4M 49.2M Amortization of intangible a
Slide 39: Non-GAAP Reconciliations
CECP CEO Investor Forum Presentation Non-GAAP Reconciliations Free Cash Flow 2019 2018 2017 2016 Net cash provided by operating activities $956.3M $934.4M $743.5M $577.5M Net cash provided by operating activities from discontinued operations —M —M —M (21.4)M Capital expenditures (216.8)M (231.0)M (1
Slide 40: © 2020 Verisk Analytics, Inc. All rights reserved.
© 2020 Verisk Analytics, Inc. All rights reserved. 40