Verisk Analytics Inc

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in millions, except for share and per share data, unless otherwise stated)

1. Organization:

Verisk Analytics, Inc. (the "Company") is a strategic data analytics and technology partner to the global insurance industry. We empower clients to strengthen operating efficiency, improve underwriting and claims outcomes, combat fraud and make informed decisions about global risks, including climate change, extreme events, sustainability, and political issues. Through advanced data analytics, software, scientific research, and deep industry knowledge, we help build global resilience for individuals, communities, and businesses. We trade under the ticker symbol "VRSK" on the Nasdaq Global Select Market.

2. Basis of Presentation and Summary of Significant Accounting Policies:

Our accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. ("U.S. GAAP"). The preparation of financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include acquisition purchase price allocations, the fair value of goodwill and intangibles, the realization of deferred tax assets and liabilities, acquisition-related liabilities, fair value of stock-based compensation for stock options and performance share units granted, and assets and liabilities for pension and postretirement benefits. Actual results* may*ultimately differ from those estimates.

Our condensed consolidated financial statements as of* March 31, 2025* and for thethree months ended* March 31, 2025and2024*, in the opinion of management, include all adjustments, consisting of normal recurring items, to present fairly our financial position, results of operations, and cash flows. Our operating results for thethree months ended* March 31, 2025* arenot necessarily indicative of the results to be expected for the full year. Our condensed consolidated financial statements and related notes as of and for thethree months ended* March 31, 2025* have been prepared on the same basis as and should be read in conjunction with our annual report on Form10-K for the year ended* December 31, 2024*. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules of the SEC. We believe the disclosures made are adequate to keep the information presented from being misleading.

Recent Accounting Pronouncements

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3. Revenues:

Disaggregated revenues by type of service and by country are provided below for thethree months ended* March 31, 2025and2024*.No individual customer or country outsideof the U.S. accounted for10.0% or more of our consolidated revenues for thethree months ended* March 31, 2025* or2024.

Contract assets are defined as an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time. As of* March 31, 2025* and* December 31, 2024*, we hadno contract assets. Contract liabilities are defined as an entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or an amount of consideration is due) from the customer. As of* March 31, 2025* and* December 31, 2024*, we had contract liabilities that primarily related to unsatisfied performance obligations to provide customers with the right to use and update the online content over the remaining contract term of $592.2 million and $451.1 million, respectively. Contract liabilities, which are current and noncurrent, are included in "Deferred revenues" and "Other noncurrent liabilities" in our condensed consolidated balance sheets, respectively, as of* March 31, 2025* and* December 31, 2024*.

The following is a summary of the change in contract liabilities from* December 31, 2024* through* March 31, 2025*:

Our most significant remaining performance obligations relate to providing customers with the right to use and update the online content over the remaining contract term. Our disclosure of the timing for satisfying the performance obligation is based on the requirements of contracts with customers. However, from time to time, these contracts* maybe subject to modifications, impacting the timing of satisfying the performance obligations. These performance obligations, which are expected to be satisfied withinone* year, comprised approximately 99% and 98%** of the balance at March 31, 2025 and* December 31, 2024*.

We recognize an asset for incremental costs of obtaining a contract with a customer if we expect the benefits of those costs to be longer thanone year. As of* March 31, 2025* and* December 31, 2024*, we had deferred commissions of $82.0 million and $78.5 million, respectively, which have been included in "Prepaid expenses" and "Other noncurrent assets" in our accompanying condensed consolidated balance sheets.

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4. Investments and Fair Value Measurements:

We have certain assets and liabilities that are reported at fair value in our accompanying condensed consolidated balance sheets. To increase consistency and comparability of assets and liabilities recorded at fair value, ASC820-10, Fair Value Measurements, established athree-level fair value hierarchy to prioritize the inputs to valuation techniques used to measure fair value. ASC820-10 requires disclosures detailing the extent to which companies measure assets and liabilities at fair value, the methods and assumptions used to measure fair value, and the effect of fair value measurements on earnings. In accordance with ASC820-10, we applied the following fair value hierarchy:

The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short-term debt approximate their carrying amounts, because of the short-term nature of these instruments. Our investments in registered investment companies, which are Level1 assets measured at fair value on a recurring basis, was $1.1 million and $1.2 million as of* March 31, 2025* and* December 31, 2024*, respectively. Our investments in registered investment companies are valued using quoted prices in active markets multiplied by the number of shares owned andwere included in "Other current assets" in our accompanying condensed consolidated balance sheets.

We electednot to carry our long-term debt at fair value. The carrying value of the long-term debt represents amortized cost, inclusive of unamortized premium, and net of unamortized discount and debt issuance costs. We assess the fair value of these financial instruments based on an estimate of interest rates available to us for financial instruments with similar features, our current credit rating, and spreads applicable to us. The following table summarizes the carrying value and estimated fair value of these financial instruments as of* March 31, 2025* and* December 31, 2024*, respectively:

As of* March 31, 2025* and* December 31, 2024*, we had securities without readily determinable market values of $195.5 million and $195.3 million, respectively, which were accounted for at cost. We donot have the ability to exercise significant influence over the investees’ operating and financial policies and donot hold investments in common stock or in-substance common stock in such entities. As of* March 31, 2025* and* December 31, 2024*, we also had investments in private companies of $27.0 million, accounted for in accordance with ASC323-10-25, The Equity Method of Accounting for Investments in Common Stock ("ASC323-10-25"), as equity method investments. All such investments were included in "Other noncurrent assets" in our accompanying condensed consolidated balance sheets. For thethree months ended* March 31, 2025*, there wasno provision for credit losses related to these investments.

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5. Leases:

We have operating and finance leases for corporate offices, data centers, and certain equipment that are accounted for under ASC842, Leases ("ASC842").

The following table presents the consolidated lease cost and cash paid for amounts included in the measurement of lease liabilities for finance and operating leases for thethree months ended* March 31, 2025and2024*, respectively:

(1)Included in "Cost of revenues" and "Selling, general and administrative" expenses in our accompanying condensed consolidated statements of operations

(2)Included in "Depreciation and amortization of fixed assets" in our accompanying condensed consolidated statements of operations

(3)Included in "Interest expense" in our accompanying condensed consolidated statements of operations

The following table presents weighted-average remaining lease terms and weighted-average discount rates for the consolidated finance and operating leases as of* March 31, 2025and2024*, respectively:

Our right-of-use ("ROU") assets and lease liabilities for finance leases were $42.9 million and $40.1 million, respectively, as of* March 31, 2025*. Our ROU assets and lease liabilities for finance leases were $47.7 million and $41.4 million, respectively, as of* December 31, 2024*. Our ROU assets for finance leases were included in "Fixed assets, net" in our accompanying condensed consolidated balance sheets. Our lease liabilities for finance leases were included in the "Short-term debt and current portion of long-term debt" and "Long-term debt" in our accompanying condensed consolidated balance sheets (see Note10. Debt).

Maturities of lease liabilities for the remainder of2025 and the years through2030 and thereafter are as follows:

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6. Acquisitions:

For thethree months ended* March 31, 2025and2024*, we incurred transaction costs of $0.8 million and $0.1 million, respectively. The transaction costs were included within "Selling, general and administrative" expenses in our accompanying condensed consolidated statements of operations. There have beenno acquisitions in thefirst quarter of2025.

Acquisition Escrows and Related Liabilities

As of* March 31, 2025*, the acquisition of Rocket Enterprise Solutions GmbH ('Rocket'), Mavera Holding AB ('Mavera'), and Morning Data Limited ('Morning Data') included acquisition-related contingent payments, for which the sellers of these acquisitions could receive additional payments by achieving the specific predetermined revenue, EBITDA margin, and/or Cash EBITDA earn-out targets for exceptional performance. We believe that the liabilities recorded as of* March 31, 2025* and* December 31, 2024* reflect the best estimate of acquisition-related contingent payments. There wasno associated current portion of the contingent payments as of* March 31, 2025* and* December 31, 2024*, respectively. The associated noncurrent portion of acquisition-related contingent payments was $2.2 million as of* March 31, 2025* and* December 31, 2024*.

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7. Goodwill and Intangible Assets:

The following is a summary of the change in goodwill from* December 31, 2024* through* March 31, 2025*:

Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of* June30,* or whenever events or changes in circumstances indicate that the carrying amount* maynot* be fully recoverable. When evaluating goodwill for impairment, we* maydecide tofirst* perform a qualitative assessment, or “Step Zero” impairment test, to determine whether it is more likely thannot that impairment has occurred. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and our own overall financial and share price performance, among other factors. If we donot perform a qualitative assessment, or if we determine that it is more likely thannot that the carrying amounts of our reporting units exceeds their fair value, we perform a quantitative assessment and calculate the estimated fair value of the respective reporting unit. If the carrying amount of a reporting unit’s goodwill exceeds the fair value of that goodwill, an impairment loss is recognized. As of* June 30, 2024,we completed our stepzero* impairment test at the reporting unit level and determined it wasnot more likely thannot that the carrying values of our reporting units exceeded their fair values. We didnot recognize any impairment charges related to our goodwill and indefinite-lived intangible assets. During thethree months ended* March 31, 2025*, we continued to monitor these reporting units for events that would trigger an interim impairment test; we didnot identify any such events.

There wereno impairments to long lived assets for thethree months ended* March 31, 2025and2024*.

Our intangible assets and related accumulated amortization consisted of the following:

Amortization expense related to intangible assets for thethree months ended* March 31, 2025and2024* was $15.8 million and $18.5 million, respectively. Estimated amortization expense for the remainder of2025 and the years through2030 and thereafter for intangible assets subject to amortization is as follows:

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8. Income Taxes:

Our effective tax rate for thethree months ended* March 31, 2025* was 21.6% compared to the effective tax rate for thethree months ended* March 31, 2024* of 20.3%. The increase in the effective tax rate was primarily due to a nonrecurring tax benefit recognized in the prior period. The difference between statutory tax rates and our effective tax rate is primarily due to state and local taxes, partially offset by tax benefits attributable to equity compensation.

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