VRSK Verisk Analytics, Inc. - 10-K

Item 1A.

Risk Factors

You should carefully consider the following risks and all of the other information set forth in this annual report on Form 10-K before deciding to invest in any of our securities. If any of the following risks actually occurs, our business, financial condition or results of operations would likely suffer. In such case, the trading price of our securities, including our common stock, could decline due to any of these risks, and you may lose all or part of your investment.

Strategic and Operational Risks Related to Our Business

We are subject to competition in many of the markets in which we operate and we may not be able to compete effectively.

Markets in which we operate or which we believe may provide growth opportunities for us are highly competitive, and are expected to remain highly competitive. We compete on the basis of quality, customer service, product and service selection, and pricing. Our competitive position in various market segments depends upon the relative strength of competitors in the segment and the resources devoted to competing in that segment. Certain competitors may be able to allocate greater resources to a particular market segment than we can. As a result, these competitors may be in a better position to anticipate and respond to changing customer preferences, emerging technologies and market trends. In addition, new competitors and alliances may emerge to take market share away, and as we enter into new lines of business, due to acquisition or otherwise, we face competition from new players with different competitive dynamics. We may be unable to maintain our competitive position in our market segments, especially against larger competitors. We may also invest further to upgrade our systems in order to compete. If we fail to successfully compete, our business, financial position and results of operations may be adversely affected.

We could lose our access to data from external sources, which could prevent us from providing our solutions.

We depend upon data from external sources, including data received from customers and various government and public record services, for information used in our data repositories. In general, we do not own the information in these data repositories, and the participating organizations could discontinue or materially limit contributing information to the data repositories. Our data sources could withdraw or increase the price for their data for a variety of reasons, and we could also become subject to legislative, judicial, or contractual restrictions on the use of such data, in particular if such data is not collected by the third parties in a way that allows us to legally use and/or process the data. We are also reliant on internal controls of third parties to ensure the accuracy of their data. If a third party suffers reputational damage from an underlying issue, we may discontinue using their services. If a substantial number of data sources, or certain key sources, were to withdraw, materially limit, be unable to provide their data, or if we were to lose access to data due to government regulation or policy, decline in reputation or if the collection of data became uneconomical, our ability to provide solutions to our customers could be impacted, which could materially adversely affect our business, reputation, financial condition, operating results, and cash flows.

Agreements with our data suppliers are short-term agreements. Some suppliers are also competitors, which may make us vulnerable to unpredictable price increases and may cause some suppliers not to renew certain agreements. Our competitors could also enter into exclusive contracts with our data sources. If our competitors enter into such exclusive contracts, we may be precluded from receiving certain data from these suppliers or restricted in our use of such data, which would give our competitors an advantage. Such a termination or exclusive contracts could have a material adverse effect on our business, financial position, and operating results if we were unable to arrange for substitute data sources.

To the extent the availability of free or relatively inexpensive information increases, the demand for some of our solutions may decrease.

Public sources of free or relatively inexpensive information have become increasingly available and this trend is expected to continue. Governmental agencies in particular have increased the amount of information to which they provide free public access. Public sources of free or relatively inexpensive information may reduce the demand for our solutions. To the extent that customers choose not to obtain solutions from us and instead rely on information obtained at little or no cost from these public or less expensive sources, our business and results of operations may be adversely affected.

If we are unable to develop successful new solutions or if we experience defects, failures and delays associated with the introduction of new solutions, our business could suffer serious harm.

Our growth and success depend upon our ability to develop and sell new solutions. If we are unable to develop new solutions, or if we are not successful in introducing and/or obtaining regulatory approval or acceptance for new solutions, or products we develop face sufficient pricing pressure to make them unattractive to pursue, we may not be able to grow our business, or growth may occur more slowly than we anticipate. In addition, significant undetected errors or delays in new solutions may affect market acceptance of our solutions and could harm our business, financial condition or results of operations. In the past, we have experienced delays while developing and introducing new solutions, primarily due to difficulties in developing models, acquiring data and adapting to particular operating environments. Errors or defects in our solutions that are significant, or are perceived to be significant, could result in rejection of our solutions, damage to our reputation, loss of revenues, diversion of development resources, an increase in product liability claims, and increases in service and support costs and warranty claims.

We typically face a long selling cycle to secure new contracts that require significant resource commitments, which result in a long lead time before we receive revenues from new relationships.

We typically face a long selling cycle to secure a new contract and there is generally a long preparation period in order to commence providing the services. We typically incur significant business development expenses during the selling cycle and we may not succeed in winning a new customer’s business, in which case we receive no revenues and may receive no reimbursement for such expenses. Even if we succeed in developing a relationship with a potential new customer, we may not be successful in obtaining contractual commitments after the selling cycle or in maintaining contractual commitments after the implementation cycle, which may have a material adverse effect on our business, results of operations and financial condition.

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We derive a substantial portion of our revenues from U.S. P&C primary insurers. If there is a downturn in the U.S. insurance industry or that industry does not continue to accept our solutions, our revenues will decline.

Revenues derived from solutions we provide to U.S. P&C primary insurers account for a substantial portion of our total revenues. During the year ended December 31, 2025, approximately 70% of our re venue was derived from solutions provided to U.S. P&C primary insurers. Also, our invoices for certain of our solutions are linked in part to premiums in the U.S. P&C insurance market, which may rise or fall in any given year due to loss experience and capital capacity and other factors in the insurance industry such as responses to natural disasters and climate-related events that are beyond our control. In addition, our revenues will decline if the insurance industry does not continue to accept our solutions.

Factors that might affect the acceptance of these solutions by P&C primary insurers include the following:

changes in the business analytics industry;

changes in technology;

our inability to obtain or use state fee schedule or claims data in our insurance solutions;

changes in regulation

saturation of market demand;

loss of key customers;

industry consolidation;

failure to execute our customer-focused selling approach; and

insourcing by insurers of the services or analytics we currently provide.

A downturn in the insurance industry, pricing pressure or lower acceptance of our solutions by the insurance industry could result in a decline in revenues from that industry and have a material adverse effect on our financial condition, results of operations and cash flows.

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Acquisitions, other strategic relationships and dispositions of our business, and related integration and separation risks, could result in operating difficulties and other harmful consequences, and we may not be successful in achieving the anticipated benefits of such transactions.

Our long-term business strategy includes growth through acquisitions and other strategic relationships. Future acquisitions may not be completed on acceptable terms and acquired assets, data or businesses may not be successfully integrated into our operations, and we may ultimately divest unsuccessful acquisitions or investments. Moreover, from time to time we may also undertake dispositions of certain businesses or assets. Any acquisitions, investments and dispositions will be accompanied by the risks commonly encountered in such transactions. Such risks include, among other things:

failing to implement or remediate controls, procedures and policies appropriate for a larger public company at acquired companies that prior to the acquisition lacked such controls, procedures and policies;

paying more than fair market value for an acquired company or assets, or receiving less than fair market value for disposed businesses or assets;

failing to integrate or separate the operations and personnel of the acquired or disposed businesses in an efficient, timely manner;

assuming potential liabilities of an acquired company;

managing the potential disruption to our ongoing business;

distracting management focus from our core businesses;

failing to retain management at the acquired company;

difficulty in acquiring suitable businesses, including challenges in predicting the value an acquisition will ultimately contribute to our business;

possibility of overpaying for acquisitions, particularly those with significant intangible assets that derive value using novel tools and/or are involved in niche markets;

impairing relationships with employees, customers, and strategic partners;

incurring expenses associated with the amortization of intangible assets particularly for intellectual property and other intangible assets;

incurring expenses associated with an impairment of all or a portion of goodwill and other intangible assets due to changes in market conditions, weak economies in certain competitive markets, or the failure of certain acquisitions to realize expected benefits; and

diluting the share value and voting power of existing stockholders.

The anticipated benefits of many of our acquisitions may not materialize. Future acquisitions or dispositions could result in the incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill and other intangible assets, any of which could harm our financial condition.

We may incur substantial additional indebtedness in connection with future acquisitions.

In order to finance acquisitions, which are an important part of our long-term growth strategy, we may incur substantial additional indebtedness and such increased leverage could adversely affect our business. In particular, the increased leverage could increase our vulnerability to sustained, adverse macroeconomic weakness, limit our ability to obtain further financing and limit our ability to pursue other operational and strategic opportunities. The increased leverage, potential lack of access to financing and increased expenses could have a material adverse effect on our financial condition, results of operations and cash flows.

There may be consolidation in our end customer market, which could reduce the use of our services.

Mergers or consolidations among our customers could reduce the number of our customers and potential customers. This could adversely affect our revenues even if these events do not reduce the aggregate number of customers or the activities of the consolidated entities. If our customers merge with or are acquired by other entities that are not our customers, or that use fewer of our services, they may discontinue or reduce their use of our services. The adverse effects of consolidation will be greater in sectors that we are particularly dependent upon, for example, in the P&C insurance sector. Any of these developments could materially adversely affect our business, financial condition, operating results, and cash flows.

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Financial and Economic Risks Related to Our Business

General economic, political and market forces and dislocations beyond our control could reduce demand for our solutions and harm our business.

The demand for our solutions may be impacted by domestic and international factors that are beyond our control, including macroeconomic, political and market conditions, global supply chain disruption, the availability of short-term and long-term funding and capital, the level and volatility of interest rates, currency exchange rates, and inflation. Any one or more of these factors may contribute to reduced activity and prices in the securities markets generally and could result in a reduction in demand for our solutions, which could have an adverse effect on our results of operations and financial condition. A significant additional decline in the value of assets for which risk is transferred in market transactions could have an adverse impact on the demand for our solutions.

Our financial position may be impacted by tax audits or changes in tax laws or tax ruling

We are subject to tax in the U.S., various states, and foreign jurisdictions, and are routinely under audit by various tax authorities. Our existing corporate structure and tax positions have been implemented in a manner which we believe is compliant with current tax laws, however it is possible that tax authorities may disagree with the positions we have taken due to differing interpretations of prevailing tax rules. Tax audits with an adverse outcome could have a material impact on our effective tax rate, cash tax positions, and deferred tax assets and liabilities.

Existing tax laws in the jurisdictions in which we operate are subject to change given current political and economic conditions. Changes in existing tax laws or rulings, or changes in interpretations of existing laws, could have a significant impact on our effective tax rate, cash tax positions, and deferred tax assets and liabilities. Furthermore, the Organization for Economic Co-operation and Development ("OECD") has issued Pillar Two model rules for a global minimum tax of 15% that has been agreed upon in principle by over 140 countries. While we have assessed the effect of Pillar Two and do not expect it to materially increase our tax expense, the ultimate impact will depend on the implementation of specific rules in each jurisdiction.

Cybersecurity and Product/Technology Risks Related to Our Business

Fraudulent or unpermitted data access and other cyber-security or privacy breaches may negatively impact our business and harm our reputation.

Security breaches in our facilities, computer networks, and data repositories may cause harm to our business and reputation and result in a loss of customers. Many of our solutions involve the storage and transmission of proprietary information and sensitive or confidential data, which are significantly complex with various uses across businesses and locations. With a large number of inter-related systems, keeping the technology current and managing vulnerabilities is challenging. As with other global companies, our systems are regularly subject to cyber-attacks, cyber-threats, attempts at fraudulent access, physical break-ins, computer viruses, attacks by hackers and similar disruptive problems. As cyber-threats continue to evolve, we are required to expend significant additional resources to continue to modify and enhance our protective measures and to investigate and remediate any information security vulnerabilities and incidents. Despite efforts to ensure the integrity of our systems and implement controls, processes, policies and other protective measures, we may not be able to anticipate or detect all security breaches or fraudulent access attempts, nor may we be able to implement guaranteed preventive measures against such security breaches or fraudulent access attempts. Cyber-threats are rapidly evolving and we may not be able to anticipate, prevent or detect all such attacks and could be held liable for any security breach or loss.

Third-party contractors, including cloud-based service providers, also may experience security breaches involving the storage and transmission of proprietary information. If users gain improper access to our data repositories, they may be able to steal, publish, delete or modify confidential third-party information that is stored or transmitted on our networks. Our business relies on the secure processing, transmission, storage and retrieval of confidential, proprietary and other information in our computer and data management systems and networks, and in the computer and data management systems and networks of third parties. In addition, to access our network, products and services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks.

In addition, customers’, employees’ or other’s misuse of and/or gaining fraudulent or unpermitted access to or failure to properly secure our information or services could cause harm to our business and reputation and result in loss of customers. Any such misappropriation and/or misuse of or failure to properly secure our information could result in us, among other things, being in breach of certain data protection and related legislation.

A security or privacy breach may affect us in the following ways:

deterring customers from using our solutions;

deterring data suppliers from supplying data to us;

harming our reputation;

exposing us to liability;

increasing operating expenses to correct problems caused by the breach;

affecting our ability to meet customers’ expectations; and/or

causing inquiry from governmental authorities.

Incidents in which consumer data has been fraudulently or improperly acquired or viewed, or any other security or privacy breaches, have in the past occurred, and may in the future occur and could go undetected. The number of potentially affected consumers identified by any future incidents is inherently uncertain. Any such incident could materially adversely affect our business, reputation, financial condition, operating results and cash flows. In addition, media or other reports of perceived security vulnerabilities to our systems or those of our third-party suppliers, even if no breach has been attempted or occurred, could also adversely impact our reputation and materially impact our business.

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We may lose key business assets, through the loss of data center capacity or the interruption of cloud computing, telecommunications links, the internet, or power sources, which could significantly impede our ability to do business.

Our operations depend on our ability, as well as that of third-party service providers to whom we have outsourced several critical functions, to protect data centers, whether in cloud or dedicated environments, and related technology against damage from hardware failure, fire, flood, power loss, telecommunications failure, impacts of terrorism, breaches in security (such as the actions of computer hackers), natural disasters, or other disasters. Certain of our facilities are located in areas that could be impacted by coastal flooding, earthquakes or other disasters. The online services we provide are dependent on links to telecommunications providers. In addition, we generate a significant amount of our revenues through websites and call centers that we utilize in the acquisition of new customers, fulfillment of solutions and services and responding to customer inquiries. We may not have sufficient redundant operations to cover a loss or failure in all of these areas in a timely manner. Certain of our customer contracts provide that our online servers may not be unavailable for specified periods of time. Any damage to our or our third-party service provider’s data centers, failure of our telecommunications links or inability to access these websites or call centers could cause interruptions in operations that materially adversely affect our ability to meet customers’ requirements, resulting in decreased revenue, operating income and earnings per share.

A technology vendor that provides critical services, such as cloud-based infrastructure, creates a single point of failure resulting in pricing or contract lock-in risk.

As our operations migrate to a cloud-based information technology infrastructure and delivery model (distributed computing infrastructure platform for business), systems are consolidated into a smaller number of large infrastructure suppliers. We cannot easily switch cloud providers, meaning that any disruption of or interference with our use of a particular supplier, would impact our operations and our business would be adversely impacted. Any of the few of these suppliers could suffer an outage which would in turn result in an outage for one or more of our products. These suppliers could also be subject to regulatory actions, or conflicts of interest which could force us to seek alternative suppliers in a short time period, at an economic disadvantage.

AI use by our customers or other third parties could result in the replacement of our existing products and/or solutions or the reduction of their relevance.

Many of our products rely on proprietary or copyrighted material which could be fed into AI models without our knowledge. Evolved AI-based ecosystems and workflow automation developed by our customers or generic datasets enhanced by AI could compete more effectively with our products or solutions. This could result in duplication of our products or solutions by AI tools and reduce the relevance or value proposition of such products or solutions.

Our own use of AI to enhance our products could lead to unanticipated consequences such as ethical, compliance, privacy-observing, bias-reducing, and/or intellectual property issues.

Increasing use of AI, including but not limited to generative AI models and agentic AI processes, in our internal systems may create new attack methods for adversaries and raise ethical, technological, legal, regulatory, and other challenges, which may negatively impact our brands and demand for our products and services. Our business policies and internal security controls may not keep pace with these changes as new threats emerge, or the emerging cybersecurity regulations in jurisdictions worldwide. Additionally, we are actively adding new AI features to our services. Because the AI landscape is developing and inherently risky, no assurance can be given that such strategies and offerings will be successful or will not harm our reputation, financial condition, and operating results. Product features that rely on AI may be susceptible to unanticipated security threats from sophisticated adversaries.

We use analytical models to assist our customers in key areas, such as underwriting, claims, reserving, and catastrophe risks, but actual results could differ materially from the model outputs and related analyses.

We use various modeling techniques (e.g., scenarios, predictive, stochastic and/or forecasting) and data analytics to analyze and estimate exposures, loss trends and other risks associated with our products. We use the modeled outputs and related analyses to assist customers with decision-making (e.g., underwriting, pricing, claims, reserving, reinsurance, and catastrophe risk). The modeled outputs and related analyses are subject to various assumptions, uncertainties, model errors and the inherent limitations of any statistical analysis, including the use of historical internal and industry data. In addition, the modeled outputs and related analyses may occasionally contain inaccuracies, perhaps in material respects, including as a result of inaccurate inputs or applications thereof. Climate change and other variables may make modeled outcomes less certain or produce new, non-modeled risks. Consequently, actual results may differ materially from our modeled results. If, based upon these models or other factors, we provide inaccurate information to customers, or overestimate the risks we are exposed to, new business growth and retention of our existing business may be adversely affected which could have an adverse effect on our results of operations and financial condition.

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Legal, Regulatory and Compliance Risks Related to Our Business

We will continue to rely upon proprietary technology rights, and if we are unable to protect them, our business could be harmed.

Our success depends, in part, upon our intellectual property rights. To date, we have relied primarily on a combination of copyright, patent, trade secret, and trademark laws and nondisclosure and other contractual restrictions on copying and distribution to protect our proprietary technology. This protection of our proprietary technology is limited, and our proprietary technology could be used by others without our consent. In addition, patents may not be issued with respect to our pending or future patent applications, and our patents may not be upheld as valid or may not prevent the development of competitive products. Businesses we acquire also often involve intellectual property portfolios, which increase the challenges we face in protecting our strategic advantage. Any disclosure, loss, invalidity of, or failure to protect our intellectual property could negatively impact our competitive position, and ultimately, our business. Our protection of our intellectual property rights in the U.S. or abroad may not be adequate and others, including our competitors, may use our proprietary technology without our consent. Furthermore, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of resources and could harm our business, financial condition, results of operations, and cash flows.

Regulatory developments could negatively impact our business.

Because personal, public and non-public information is stored in some of our data repositories, we are vulnerable to government regulation and policy, as well as adverse publicity concerning the use of our data. We provide many types of data and services that already are subject to regulation under the Fair Credit Reporting Act, Gramm-Leach-Bliley Act, Driver’s Privacy Protection Act, the European Union’s General Data Protection Regulation, the Dodd Frank Wall Street Reform and Consumer Protection Act and to a lesser extent, various other federal, state, and local laws and regulations. These laws and regulations are designed to protect the privacy of the public and to prevent the misuse of personal information in the marketplace. However, many consumer advocates, privacy advocates, and government regulators believe that the existing laws and regulations do not adequately protect privacy. They have become increasingly concerned with the use of personal information, particularly social security numbers, department of motor vehicle data and dates of birth. As a result, they are lobbying for further restrictions on the dissemination or commercial use of personal information to the public and private sectors. Similar initiatives are under way in other countries in which we do business or from which we source data. We have implemented various measures to comply with the data privacy and protection principles of the European Union’s General Data Protection Regulation, however, there can be no assurances that such methods will be deemed fully compliant. If we are unable to comply with the data privacy and protection principles adopted pursuant to the General Data Protection Regulation, it will impede our ability to conduct business between the U.S. and the E.U. which could have a material adverse effect on our business, financial position, results of operations or cash flows.

The following legal and regulatory developments also could have a material adverse effect on our business, financial position, results of operations or cash flows:

amendment, enactment, interpretation of laws and regulations or implementation of policy which restrict the access and use of personal information and reduce the supply of data available to customers;

changes in cultural and consumer attitudes to favor further restrictions on information collection and sharing, which may lead to regulations that prevent full utilization of our solutions;

failure of our solutions or business processes or policies to meet or comply with current and future laws and regulations and their interpretations;

failure of our solutions or business processes or policies to adapt to changes in the regulatory environment in an efficient, cost-effective manner; and

potential inquiries or investigations from government officials or others related to our policies and practices governing, among other topics, social issues.

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We are subject to antitrust, consumer protection, intellectual property, data privacy, and other litigation, as well as governmental investigations, and may in the future become further subject to such litigation and investigations; an adverse outcome in such litigation or investigations could have a material adverse effect on our financial condition, revenues and profitability.

We participate in businesses (particularly insurance-related businesses and services) that are subject to substantial litigation, including antitrust, consumer protection, intellectual property litigation, and data use and privacy. In addition, our insurance specialists are in the business of providing advice on standard contract terms, which if challenged could expose us to substantial reputational harm and possible liability. We are subject to the provisions of a 1995 settlement agreement in an antitrust lawsuit brought by various state Attorneys General and private plaintiffs, which imposes certain constraints with respect to insurer involvement in our governance and business.

Our failure to successfully defend or settle any litigation or resolve any governmental investigation, inquiry or examination could result in liability that, to the extent not covered by our insurance, could have a material adverse effect on our financial condition, revenues and profitability. Given the nature of our business, we may be subject to litigation or investigation, inquiry or examination in the future. Even if the direct financial impact of such litigation or investigations is not material, settlements or judgments arising out of such litigation or investigations could include further restrictions on our ability to conduct business, including potentially the elimination of entire lines of business, which could increase our cost of doing business and limit our prospects for future growth.

We could face claims for intellectual property infringement, which if successful could restrict us from using and providing our technologies and solutions to our customers.

There has been substantial litigation and other proceedings, particularly in the U.S., regarding patent and other intellectual property rights in the information technology industry. There is a risk that we are infringing, or may in the future infringe, the intellectual property rights of third parties. We have, from time-to-time, been subject to litigation alleging intellectual property infringement. We monitor third-party patents and patent applications that may be relevant to our technologies and solutions and we carry out freedom to operate an analysis where we deem appropriate. However, such monitoring and analysis has not been, and is unlikely in the future to be, comprehensive, and it may not be possible to detect all potentially relevant patents and patent applications. Since the patent application process can take several years to complete, there may be currently pending applications, unknown to us, that may later result in issued patents that cover our products and technologies. As a result, we may infringe existing and future third-party patents of which we are not aware. As we expand our operations there is a higher risk that such activity could infringe the intellectual property rights of third parties.

Third-party intellectual property infringement claims and any resultant litigation against us or our technology partners or providers, could subject us to liability for damages, restrict us from using and providing our technologies and solutions or operating our business generally, or require changes to be made to our technologies and solutions. Even if we prevail, litigation is time consuming and expensive to defend and would result in the diversion of management’s time and attention.

If a successful claim of infringement is brought against us and we fail to develop non-infringing technologies and solutions or to obtain licenses on a timely and cost-effective basis, this could materially adversely affect our business, reputation, financial condition, operating results, and cash flows.

We are subject to extensive procurement laws and regulations, including those that enable the U.S. government to terminate contracts for convenience. Our business and reputation could be adversely affected if we or those we do business with fail to comply with or adapt to existing or new procurement laws and regulations which are constantly evolving.

We and others with which we do business must comply with laws and regulations relating to the award, administration and performance of U.S. government contracts. Government contract laws and regulations as well as policy implementation affect how we do business with our customers and impose certain risks and costs on our business. A violation of these laws and regulations by us, our employees, or others working on our behalf, such as a supplier or a joint venture partner, could harm our reputation and result in the imposition of fines and penalties, the termination of our contracts, suspension or debarment from bidding on or being awarded contracts, loss of our ability to perform services and civil or criminal investigations or proceedings. In addition, costs to comply with new government regulations can increase our costs, reduce our margins, and adversely affect our competitiveness.

Government contract laws and regulations can impose terms, obligations or penalties that are different than those typically found in commercial transactions. One of the significant differences is that the U.S. government may terminate any of our government contracts, not only for default based on our performance, but also at its convenience. Contracts with governments are also subject to a number of issues, such as shutdowns, funding changes, policy and other government concerns that may impact the terms or performance of a contract. Generally, prime contractors have a similar right under subcontracts related to government contracts. If a contract is terminated for convenience, we typically would be entitled to receive payments for our allowable costs incurred and the proportionate share of fees or earnings for the work performed. However, to the extent insufficient funds have been appropriated by the U.S. government to a particular program to cover our costs upon a termination for convenience, the U.S. government may assert that it is not required to appropriate additional funding. If a contract is terminated for default, the U.S. government could make claims to reduce the contract value or recover its procurement costs and could assess other special penalties, in some cases in excess of the contract value, exposing us to liability and adversely affecting our ability to compete for future contracts and orders. In addition, the U.S. government could terminate a prime contract under which we are a subcontractor, notwithstanding the fact that our performance and the quality of the products or services we delivered were consistent with our contractual obligations as a subcontractor. Similarly, the U.S. government could indirectly terminate a program or contract by not appropriating funding. The decision to terminate programs or contracts for convenience or default could adversely affect our business and future financial performance. Similarly, a government funding pause, suspension, or shut down could adversely affect our business and future financial performance.

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General Risk Factors Related to Our Business

Our operations are subject to additional risks inherent in international operations.

With operations in 15  countries, we provide servi ces to the insurance industry worldwide, including operations in various developing nations. Both current and future foreign operations could be adversely affected by unfavorable geopolitical developments, including legal and regulatory changes; tax changes; changes in trade policies; changes to visa or immigration policies; regulatory restrictions; government leadership changes; political events and upheaval; sociopolitical instability; social, political or economic instability resulting from climate change; and nationalization of our operations without compensation. Adverse activity in any one country could negatively impact operations, increase our loss exposure under certain of our insurance products, and could, otherwise, have an adverse effect on our business, liquidity, results of operations, and financial condition depending on the magnitude of the events and our net financial exposure at that time in that country.

Conducting extensive international operations subjects us to risks that are inherent in international operations, including challenges posed by different pricing environments and different forms of competition; lack of familiarity and burdens of complying with foreign laws, legal standards, regulatory requirements, tariffs and other barriers; unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties, or other trade restrictions; differing technology standards; difficulties in collecting accounts receivable; difficulties in managing and staffing international operations; varying expectations as to employee standards; potentially adverse tax consequences, including possible restrictions on the repatriation of earnings; and reduced or varied protection for intellectual property rights in some countries. In addition, our international operations subject us to obligations associated with anti-corruption laws and regulations, such as the U.K. Bribery Act 2010, the U.S. Foreign Corrupt Practices Act and regulations established by the U.S. Office of Foreign Assets Control. Government agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against companies for violations of export controls, anti-corruption laws or regulations, and other laws, rules, sanctions, embargoes, and regulations.

Moreover, international operations could be interrupted and negatively affected by economic changes, geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war, and other economic or political uncertainties. All of these risks could result in increased costs or decreased revenues, either of which could have a material adverse effect on our financial condition, results of operations and cash flows.

We may fail to attract and retain enough qualified employees to support our operations, which could have an adverse effect on our ability to expand our business and service our customers.

Our business relies on large numbers of skilled employees and our success depends on our ability to attract, train and retain a sufficient number of qualified employees. If our attrition rate increases, our operating efficiency and productivity may decrease. We compete for employees not only with other companies in our industry, but also with companies in other industries, such as software services, engineering services and financial services companies, and there is a limited pool of employees who have the skills and training needed to do our work.

If our business continues to grow, the number of people we will need to hire will increase. We will also need to increase our hiring if we are not able to maintain our attrition rate through our current recruiting and retention policies. Increased competition for employees could have an adverse effect on our ability to expand our business and service our customers, as well as cause us to incur greater personnel expenses and training costs.

Physical and transition risks associated with climate change and its consequences could disrupt operations, threaten the safety of employees, or negatively impact our financial performance.

While we seek to be a strategic partner to the global insurance industry in analyzing risks related to climate change and building resilience, we recognize that there are inherent risks wherever business is conducted. Climate-related events and its associated risks including acute physical risk such as heatwave, hurricane/cyclone, inland flooding, and wildfire, and chronic physical risk such as sea level rise and water stress could disrupt our operations and threaten the safety of our employees. Transition risks associated with achieving a lower-carbon global economy encompassing policy and legal risk such as potential costs associated with the introduction of mandatory global carbon pricing and regulatory mandates involving climate-related reporting obligations, technology risk such as the potential increase in costs associated with a mandated transition to low-emissions technologies, market risk such as the potential impacts of a market shift in customer demand toward low-carbon solutions, and reputation risk such as potential impacts on our business from increasing stakeholder expectations related to real or perceived deficiencies associated with our climate leadership, strategy, performance, or disclosures could negatively impact our financial performance.

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We have transitioned to a new Enterprise Resource Planning system and our ability to manage our business and monitor results is highly dependent upon information and communication systems. A failure of these systems or the ERP implementation could disrupt our business and results of operations.

We are highly dependent upon a variety of internal computer and telecommunication systems to operate our business, including our enterprise resource planning (“ERP”) systems.

In order to continue support of our growth, we have made and are continuing to make significant technological upgrades to our information systems. We have substantially completed the implementation of a company-wide, single ERP software system and related processes to perform various functions and improve on the efficiency of our global business. This was and continues to be a lengthy and expensive process that has and will continue to result in a diversion of resources from other operations. Continued execution of the project plan, or a divergence from it, may result in cost overruns, project delays or business interruptions. In addition, divergence from our project plan could impact the timing and/or extent of benefits we expect to achieve from the system and process efficiencies.

Any disruptions or deficiencies in the design and/or final implementation of the new ERP system, or in the transition off our legacy systems, particularly any disruptions or deficiencies that impact our operations, could adversely affect our ability to effectively run and manage our business and adversely affect our reputation, competitive position, business, results of operations and financial condition.

Risks Related to Our Common Stock

If there are substantial sales of our common stock, our stock price could decline.

The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market, or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem attractive. As of December 31, 2025 , our ten largest shareholders owned 39.3% of our common stock, including 1.8% of our common stock owned by our Employee Stock Ownership Plan or ESOP. Such stockholders are able to sell their common stock in the public market from time to time without registration, and subject to limitations on the timing, amount and method of those sales imposed by securities laws. If any of these stockholders were to sell a large number of their common stock, the market price of our common stock could decline significantly. In addition, the perception in the public markets that sales by them might occur could also adversely affect the market price of our common stock.

Pursuant to our equity incentive plans, options to purchase approximately  137,941,888  shares of common stock were outstanding as of February 13, 2026. We filed a registration statement under the Securities Act, which covers the shares available for issuance under our equity incentive plans (including for such outstanding options) as well as shares held for resale by our existing stockholders that were previously issued under our equity incentive plans. Such further issuance and resale of our common stock could cause the price of our common stock to decline.

Also, in the future, we may issue our securities in connection with investments and acquisitions. The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding common stock.

Our capital structure, level of indebtedness and the terms of anti-takeover provisions under Delaware law and in our amended and restated certificate of incorporation and bylaws could diminish the value of our common stock and could make a merger, tender offer or proxy contest difficult or could impede an attempt to replace or remove our directors.

We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our certificate of incorporation and bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable or make it more difficult for stockholders to replace directors even if stockholders consider it beneficial to do so. Our certificate of incorporation and bylaws:

authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares to thwart a takeover attempt;

prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of the stock to elect some directors;

require that vacancies on the Board of Directors, including newly created directorships, be filled only by a majority vote of directors then in office;

limit who may call special meetings of stockholders to holders of at least 25% of our common stock;

prohibit stockholder action by written consent, requiring all stockholder actions to be taken at a meeting of the stockholders; and

establish advance notice requirements for nominating candidates for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

In addition, Section 203 of the Delaware General Corporation Law may inhibit potential acquisition bids for us. As a public company, we are subject to Section 203, which regulates corporate acquisitions and limits the ability of a holder of 15% or more of our stock from acquiring the rest of our stock. Under Delaware law, a corporation may opt out of the anti-takeover provisions.

These provisions may prevent a stockholder from receiving the benefit from any premium over the market price of our common stock offered by a bidder in a potential takeover. Even in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

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Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our historical financial statements and the related notes included elsewhere in this annual report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in or implied by any of the forward-looking statements as a result of various factors, including but not limited to those listed under “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” New risks and uncertainties come up from time to time, and it is impossible to predict these events or how they may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by applicable federal securities law. This discussion includes a comparison of our results of operations, liquidity and capital resources, financing and financing capacity and cash flow for the years ended December 31, 2025, 2024, and 2023 .

We are a leading data analytics provider serving clients in the insurance markets. Using advanced technologies to collect and analyze billions of records, we draw on unique data assets and deep domain expertise to provide innovations that may be integrated into client workflows. We offer predictive analytics and decision support solutions to clients in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, and many other fields. In the U.S., and around the world, we help clients protect people, property, and financial assets. Refer to Item 1 . Business for further discussion.

Our clients use our solutions to make better decisions about risk and opportunities with greater efficiency and discipline. We refer to these products and services as “solutions” due to the integration among our services and the flexibility that enables our clients to purchase components or the comprehensive package. These solutions take various forms, including data, statistical models, or tailored analytics, all designed to allow our clients to make more logical decisions. We believe our solutions for analyzing risk positively impact our clients’ revenues and help them better manage their costs.

Executive Summary

Key Performance Metrics

Revenue growth . We use year-over-year revenue growth as a key performance metric. We assess revenue growth based on our ability to generate increased revenue through increased sales to existing customers, sales to new customers, sales of new or expanded solutions to existing and new customers, and strategic acquisitions of new businesses.

EBITDA. We use year-over-year EBITDA growth as a key performance metric. EBITDA and EBITDA margin are non-GAAP financial measures. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. We calculate EBITDA margin as EBITDA divided by revenues. The respective nearest applicable GAAP financial measures are net income and net income margin. Although EBITDA is a non-GAAP financial measure, EBITDA is frequently used by securities analysts, lenders, and others in their evaluation of companies; EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for an analysis of our operating income, net income, or cash flow from operating activities reported under GAAP. Management uses EBITDA and EBITDA margin in conjunction with traditional GAAP operating performance measures as part of its overall assessment of company performance. We believe these measures are useful and meaningful because they help us allocate resources, make business decisions, allow for greater transparency regarding our operating performance, and facilitate period-to-period comparisons. Some of these limitations involved in the use of EBITDA are:

• EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments.

• EBITDA does not reflect changes in, or cash requirements for, our working capital needs.

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future and EBITDA does not reflect any cash requirements for such replacements.

• Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

EBITDA growth . We use EBITDA growth as a measure of our ability to balance the size of revenue growth with cost management and investing for future growth. EBITDA growth allows for greater transparency regarding our operating performance and facilitate period-to-period comparison.

EBITDA margin. We use EBITDA margin as a measure to assess performance and scalability of our business. We assess EBITDA margin based on our ability to increase revenues while controlling expense growth.

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Revenues

We earn revenues through agreements for hosted subscriptions, advisory/consulting services, and for transactional solutions, recurring and non-recurring. Subscriptions for our solutions are generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one to five years and automatically renewed each year. As a result, the timing of our cash flows generally precedes our recognition of revenues and income and our cash flow from operations tends to be higher in the first quarter as we receive subscription payments. Examples of these arrangements include subscriptions that allow our customers to access our standardized coverage language, our claims fraud database, or our actuarial services throughout the subscription period. In general, we experience minimal revenue seasonality within the business. Approximately 83% and 81% of our consolidated revenues for the years ended December 31, 2025 and 2024 , respectively, were derived from hosted subscriptions through agreements for our solutions.

We also provide advisory/consulting services, which help our customers get more value out of our analytics and their subscriptions. In addition, certain of our solutions are paid for by our customers on a transactional basis, recurring and non-recurring. For example, we have solutions that allow our customers to access property-specific rating and underwriting information to price a policy on a commercial building, or compare a P&C insurance or a workers' compensation claim with information in our databases, or use our repair cost estimation solutions on a case-by-case basis. For the years ended December 31, 2025 and 2024 , approximately 17% and 19% of our consolidated revenues, respectively, were derived from providing transactional and advisory/consulting solutions.

Principal Operating Costs and Expenses

Personnel expenses are a major component of both our cost of revenues and selling, general and administrative expenses. Personnel expenses, which represented approximately 55% and 56% of our total operating expenses for each of the years ended December 31, 2025 and 2024 , respectively, include salaries, benefits, incentive compensation, equity compensation costs , sales commissions, employment taxes, recruiting costs, and outsourced temporary agency costs.

We assign personnel expenses between two categories, cost of revenues and selling, general and administrative costs, based on the actual costs associated with each employee. We categorize employees who maintain our solutions as cost of revenues, and all other personnel, including executive managers, salespeople, marketing, business development, finance, legal, human resources, and administrative services, as selling, general and administrative expenses. A significant portion of our other operating costs, such as facilities and communications, are either captured within cost of revenues or selling, general and administrative expense based on the nature of the work being performed.

While we expect to grow our headcount over time to take advantage of our market opportunities, we believe that the economies of scale in our operating model will allow us to grow our personnel expenses at a lower rate than revenues. Historically, our EBITDA margin has improved because we have been able to increase revenues without a proportionate corresponding increase in expenses. However, part of our corporate strategy is to invest in new solutions and new businesses, which may offset margin expansion.

Cost of Revenues. Our cost of revenues consists primarily of personnel expenses. Cost of revenues also includes the expenses associated with the acquisition and verification of data, the maintenance of our existing solutions, and the development and enhancement of our next-generation solutions. Our cost of revenues excludes depreciation and amortization.

Selling, General and Administrative Expense. Our selling, general and administrative expense also consists primarily of personnel costs. A portion of the other operating costs such as facilities, insurance, and communications are allocated to selling, general and administrative costs based on the nature of the work being performed by the employee. Our selling, general and administrative expenses exclude depreciation and amortization.

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Trends Affecting Our Business

U.S. P&C Insurance Industry Premium Growth

A significant change in the profitability of P&C insurers could affect the demand for our solutions. The keys to profitability for insurers include premium growth, increasing investment income, and disciplined and accurate underwriting of risks. Per AM Best, growth of direct written premiums for P&C insurers in the U.S. has exhibited cyclical patterns, with total industry premium growth declining from a peak of 14.8% in 2002 to a trough of (3.1)% in 2009 and subsequently recovering to 5.1% in 2019. In 2020, industry premium growth declined to 2.3% due to the impact of the pandemic. Direct premium growth accelerated to 9.5% in 2021, 9.7% in 2022, and further increased to 10.4% in 2023, indicating a continued recovery from the pandemic. Based on the most recent results available, direct written premiums slowed to 9.6% growth in 2024 and 5.1% growth rate through the first nine-months of 2025.

Macroeconomic factors influence demand for insurance products and Insurer profitability

In 2025, inflation remained above pre-pandemic levels, although it was lower than a year earlier. Annual Consumer Price Index growth was 2.7% in December 2025, remaining above the Federal Reserve's target of 2%. In response to persistent, though gradually easing, inflation and a shifting economic outlook, the Federal Reserve continued its monetary policy in December and implemented an additional rate cut that lowered the federal funds rate to a target range of 3.50–3.75%. Reductions in interest rates can lead to increased consumer spending and investment, resulting in higher demand for insurance products as individuals and businesses seek to protect their assets. In such cases, comprehensive data analysis and risk assessment support can help insurers significantly improve their operations by enabling more accurate calculations and providing a broad, systemic view of the market.

While progress has been made towards actuarially sound pricing, carriers are still working to improve loss ratios and profitability in the face of rising inflation. Until premium pricing adjustments are fully implemented, and profitability improves, some carriers are not yet spending as much as they have in the past to drive new policy volume, which could have a short-term impact on demand and volume for our underwriting solutions.

Based on the first nine months of 2025, insurers’ expected annualized yield on investments (not attributable to cash transfers from outside the P&C industry) was 4.0%, up from the 3.6% yield at year-end 2024 despite still moderately high interest rates in 2025 (compared to the pre-pandemic period). These recent investment results are higher than the historical 15-year average of 3.3%, showing that yields on investments, a major component of insurers’ balance sheets, are beginning to follow the trend in interest rates.

Trends in Catastrophe and non-Catastrophe Losses

The trend of high catastrophe losses for insurers that began in 2020 continued in 2025. Insurance losses in those six years were more than double those of the prior six years ($483.1 billion for 2020-2025 compared to $235.1 billion for 2014-2019 - however, the amounts for recent years are preliminary and subject to change based on claims that have not yet been settled.). According to our Property Claim Services data, the last six years have also had the highest number of catastrophes since 2014, ranging from a low of 62 in 2025 to a high of 74 that was reached in both 2023 and 2024. However, some of these high counts may be driven by losses that are likely exceeding the catastrophe threshold due to the impact of inflation.

Although the hurricane season in 2025 was relatively mild, the year began with devastating wildfires in California, causing damages estimated at $38 billion and ranking as the most expensive year for wildfire events in U.S. history.  In contrast, 2024 included the second most expensive Atlantic hurricane season on record, surpassed only by the losses experienced during the 2017 hurricane season.

These trends in catastrophe and non-catastrophe losses (such as from weather, climate, casualty, terrorism, pandemics, and tsunamis) can influence our customers’ profitability, and therefore their appetite for buying analytics to help them manage their risks. Any increase or decrease in frequency or severity of these events over time could lead to an increased or decreased demand for our catastrophe modeling, catastrophe loss information, and repair cost solutions. Likewise, any structural changes in the reinsurance and related brokerage industry from alternative capital or newer technologies could affect demand for our products. A portion of our revenue is also related to the number of claims processed due to losses, which can be impacted by seasonal storm or wildfire activity. The need by our customers to fight insurance fraud - both in claims and at policy inception - could also lead to increased demand for our underwriting and claims solutions.

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Description of Acquisitions

We have acquired 6 businesses since January 1, 2023. These acquisitions affect the comparability of our consolidated results of operations between periods. See a description of our 2025 acquisitions below and Note 10 . Acquisitions to our consolidated financial statements included in this annual report on Form 10-K for further discussions.

On July 17, 2025, we completed the acquisition of SuranceBay, LLC ("SuranceBay"), a leading provider of producer licensing, onboarding, appointment and compliance solutions for the life and annuity industry for $163.1 million in cash, of which $2.7 million represents indemnity escrows. This acquisition underscores our commitment to streamlining and automating the process of buying and selling insurance, and to supporting a robust life and annuity ecosystem with solutions that enhance workflows among carriers, general agencies, insurance agencies and consumers.

On April 2, 2025, we completed the acquisition of 100 percent of the stock of Nasdaq subsidiary Simplitium Limited ("Simplitium") for a cash purchase price of $19.7 million. The acquisition will provide Verisk clients with access to over 300 third-party models, providing unique, niche views of risk across the globe. The acquisition furthers our expansion in Europe and our goal of helping insurers and claims service providers leverage more holistic data and technology tools to enhance the claims experience.

Description of Dispositions

On December 31, 2025, we sold our Verisk Marketing Solutions business to ActiveProspect, backed by Five Elms Capital Management, LLC, for a net cash sale price of $80.0 million. The Verisk Marketing Solutions business provides leading marketing solutions for customers in both insurance and non-insurance industries. The sale resulted in a loss of $18.4 million that was included within "Loss on sale of assets, net" in the accompanying consolidated statements of operations for the year ended December 31, 2025.  Refer to Note 11 . Dispositions and Discontinued Operations for further discussion.

Description of Discontinued Operations

See a description of our 2023 disposition below and within  Note 11 . Dispositions and Discontinued Operations to our consolidated financial statements included in this annual report on Form 10-K for further discussions.

On February 1, 2023, we completed the sale of our Energy business to Planet Jersey Buyer Ltd, an entity that was formed on behalf of, and is controlled by, The Veritas Capital Fund VIII, L.P. and its affiliated funds and entities (“Veritas Capital”), for a net cash sale price of $3,066.4 million paid at closing (reflecting a base purchase price of $3,100.0 million, subject to customary purchase price adjustments for, among other things, the cash, working capital, and indebtedness of the companies as of the closing) and up to $200.0 million of additional contingent cash consideration based on Veritas Capital’s future return on its investment paid through a Class C Partnership interest. We recognized a loss of $131.1 million on the sale in 2023.

The Energy business, which was part of our Energy and Specialized Markets segment, was classified as discontinued operations per ASC 205-20 as we determined, qualitatively and quantitatively, that this transaction represented a strategic shift that had a major effect on our operations and financial results. Accordingly, all results of the Energy business have been removed from continuing operations and presented as discontinued operations in our consolidated statements of operations for all periods presented.

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Consolidated Results of Continuing Operations

Revenues

Revenues were  $3,072.7  million for the year ended December 31, 2025 compared to $2,881.7  million for the year ended December 31, 2024 , an increase of  $191.0  million or 6.6% . Our underwriting revenue increased $155.6 million or 7.7%. Our claims revenue increased $35.4 million or 4.1%.

Our revenue by category for the periods presented is set forth below:

Percentage change

Percentage change excluding recent acquisitions and disposition

(in millions)

Underwriting

Claims

Total Insurance

Our recent acquisitions (Simplitium and SuranceBay within the underwriting category of the Insurance segment, and Rocket within the claims category of the Insurance segment) and dispositions (Atmospheric and Environmental Research ("AER") and Verisk Marketing Solutions w ithin the underwriting category of our Insurance segment) resulted in a net decrease in revenue of $4.9 million, while the remaining Insurance revenues increased $195.9 million or 6.9%. Excluding recent acquisitions and dispositions, our underwriting revenue increased $160.7 million or 8.1%, primarily due to an annual increase in prices derived from continued enhancements to the models and content of the solutions within our forms, rules and loss cost services, as well as selling expanded solutions to new and existing customers within catastrophe and risk solutions, specialty business solutions, and life solutions. Excluding recent acquisitions and dispositions, our claims revenue increased $35.2 million or 4.1%, pr imarily due to growth in anti-fraud, property estimating, and casualty solutions.

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Cost of Revenues

Cost of revenues was $925.5  million for the year ended December 31, 2025 compared to $901.1  million for the year ended December 31, 2024 , an increas e of   $24.4  million or 2.7% . Our recent acquisitions and dispositions accounted for a net decrease of $8.3 million in cost of revenues. The remaining cost of revenues increase of $32.7 million or 3.7% was primarily due to increases in salaries and employee benefits of $ 21.3 million, information technology expense of $12.8   million, bad debt expense of $4.9 million, professional consulting fees of $1.1 million, rent expense of $0.2 million, and other operating costs of $0.1 million, partially offset by decreases in data costs of $5.4 million, office expense of $1.6 million, and insurance expense of $0.7 million.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SGA") w ere  $458.2  m illion for the year ended  December 31, 2025  compared to  $408.7  million for the year ended December 31, 2024 , an increase of $49.5  million or 12.1% . Our recent acquisitions and dispositions accounted for an increase of $17.4 million in SGA primarily due to related transaction and legal expenses. The remaining increase of $32.1 million or 8.0% was primarily due to salaries and employee benefits of $19.9 million, commissions expense of $7.6 million, information technology expense of $4.9 million, professional consulting fees of $4.6 million, and travel expense of $2.0 million, partially offset by a reduction in net losses on the disposal of fixed assets of $4.3 million, decreases in insurance expense of $2.1 million, rent expense of $0.3 million, and other operating costs of $0.2 million.

Depreciation and Amortization of Fixed Assets

Depreciation and amortization of fixed assets was  $259.2  million for the year ended December 31, 2025 compared to $233.6  million for the year ended December 31, 2024 , an increase of $25.6  million or 11.0% . The increase was primarily due to the timing of certain large internally developed software projects that were completed and placed into service in the prior year .

Amortization of Intangible Assets

Amortization of intangible assets was  $67.5  million for the year ended December 31, 2025 compared to  $72.3  million for the year ended December 31, 2024 , a decrease of  $4.8  million or 6.6% . The decrease was primarily due to intangible assets that were fully amortized in 2024, partially offset by an increase due to our recent acquisitions of $ 4.6  million.

Loss on Sale of Assets, Net

Loss on sale of assets, net was $18.4  million for the year ended December 31, 2025 compared to  $12.1  million for the year ended December 31, 2024 . The loss in the current year was primarily driven by the loss incurred on the sale of our Verisk Marketing Solutions business.

Net (loss) gain on Early Extinguishment of Debt

Net (loss) gain on early extinguishment of debt was a loss $15.0 million for the year ended December 31, 2025 due to the redemption premium accrual associated with the termination of the 2030 Senior Notes, 2036 Senior Notes, and Term Loan Facility, compared to a gain of $3.6 million for the year ended December 31, 2024 due to a cash tender offer of $400.0 million aggregate principal of our 2025 Senior Notes that was completed on June 7, 2024.

Investment Income and Others, Net

Investment income and others, net was $13.3  million for the year ended December 31, 2025 compared to  $95.7  million for the year ended December 31, 2024 . The decrease was primarily driven by net gains recognized in the prior year related to the settlement of retained interests from the sales of our healthcare business in 2016 and specialized markets business in 2022, partially offset by foreign currency effects associated with transactions conducted in the normal course of business.

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Interest Expense, Net

Interest expense, net was  $170.9  million for the year ended December 31, 2025 compared to $124.6  million for the year ended December 31, 2024 , an increase of  $46.3  million or 37.2% . The increase was primarily driven by higher interest expense resulting from the issuance of our 2030, 2035, and 2036 Senior Notes in 2025, as well as the $18.9 million amortization in 2025 of the deferred issuance costs associated with the special redemption clause contained within the 2030 Senior Notes and 2036 Senior Notes. These impacts were partially offset by lower interest expense resulting from the repayment of our 2025 Senior Notes in the second quarter of 2025 and higher interest income, in 2025.

Provision for Income Taxes

The provision for income taxes was $263.0  million for the year ended December 31, 2025 compared to $277.9  million for the year ended December 31, 2024 . The effective tax rate was 22.5 % for the year ended December 31, 2025 compared to 22.6 % for the year ended December 31, 2024 . The decrease in the effective tax rate in  2025 compared to  2024 was primarily due to tax benefits recorded in connection with the sale of our Verisk Marketing Solutions business, offset by lower tax benefits from equity compensation in the current year compared with the prior year.

Net Income Margin

The net income margin for our consolidated results was 29.6% for the year ended  December 31, 2025  compared to 33.2% for the year ended  December 31, 2024 . The decrease in net income margin was primarily driven by net gains realized in the prior year associated with the settlement of retained interests related to the prior sales of our healthcare business in 2016 and our specialized markets business in 2022, a net gain on the early extinguishment of debt in the prior year, the amortization of deferred issuance costs and original issuance discounts and redemption premium accrual in 2025 associated with the termination of the 2030 Senior Notes, 2036 Senior Notes, and Term Loan Facility, partially offset by a lower tax provision, and the impact of foreign currencies associated with transactions in the normal course of business.

EBITDA Margin  [1]

EBITDA was $1,668.9 million for the year ended  December 31, 2025 compared to $1,659.1 million for the year ended December 31, 2024 . The EBITDA margin for our consolidated results was 54.3 % for the year ended December 31, 2025 compared to 57.6 % for the year ended December 31, 2024 .  The decrease in EBITDA margin was primarily driven by net gains realized in the prior year associated with the settlement of retained interests related to the prior sales of our healthcare business in 2016 and our specialized markets business in 2022, a net gain on the early extinguishment of debt in the prior year, and the accrual in 2025 of the redemption premium related to the termination of the 2030 Senior Notes and 2036 Senior Notes, and Term Loan Facility, partially offset by the impact of foreign currencies associated with transactions in the normal course of business.

[1] Note: Consolidated EBITDA margin, a non-GAAP measure, is calculated as a percentage of consolidated revenue. A reconciliation from net income to EBITDA is in the table below:

Year Ended December 31,

Net income

Less: Gain from discontinued operations, net of tax benefit of $0.0 and $6.8, respectively

Income from continuing operations

Depreciation and amortization of fixed assets

Amortization of intangible assets

Interest expense, net

Provision for income taxes

EBITDA

Revenue

EBITDA margin

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Consolidated Results of Continuing Operations

Revenues

Revenues we re $2,881.7  million for the year ended December 31, 2024  compared to $2,681.4  million for the year ended December 31, 2023 , an increase of  $200.3  million or 7.5% .  Our underwriting revenue increased $131.6 million or 7.0%. Our claims revenue increased $68.7 million or 8.7%.

Our revenue by category for the periods presented is set forth below:

Percentage change

Percentage change excluding recent acquisitions, businesses held for sale and disposition

(in millions)

Underwriting

Claims

Total Insurance

Our recent acquisitions (Morning Data within the underwriting category of our Insurance segment; Rocket, Mavera and Krug within the claims category of the Insurance segment) and dispositions (AER) within the underwriting category of our Insurance segment) contributed net revenues of $7.4 million, while the remaining Insurance revenues increased $192.9 million or 7.2%. Our underwriting revenue increased $131.9 million or 7.0%, primarily due to an annual increase in prices derived from continued enhancements to the models and content of the solutions within our forms, rules and loss cost services, as well as selling expanded solutions to new and existing customers within extreme event solutions, underwriting data and analytic solutions, and specialty business solutions. Our claims revenue increased $61.0 million or 7.8%, primarily due to growth in anti-fraud solutions and property estimating solutions.

Cost of Revenue

Cost of rev enues was $901.1 million for the year ended December 31, 2024 compared to $876.5 million for the year ended December 31, 2023 ,  an increase of $24.6 million or 2.8%. Our recent acquisitions and dispositions accounted for an increase of $6.1 million in cost of revenues, which was primarily related to salaries and employee benefits. The remaining cost of revenues increase of $18.5 million or 2.1% was primarily due to increases in salaries and employee benefits of $8.3 million, information technology expense of $6.9 million, data costs of $6.3 million, bad debt expense of $5.6 million, and fees and membership costs of $0.7 million, partially offset by a decrease in rent expense of $3.3 million, a decrease of $2.2 million on the disposal of fixed assets, $1.5 million gain primarily related to our Jersey City lease modification, decreases in office expense of $0.8 million, insurance expense of $0.7 million, professional consulting fees of $0.5 million, and other operating costs of $0.3 million.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SGA") were $408.7 million for the year ended December 31, 2024  compared to $391.8 million for the year ended December 31, 2023 ,  an increase of $16.9 million or 4.3%. Our recent acquisitions and dispositions accounted for an increase of $22.7 million in SGA. This increase was primarily due to an acquisition-related earn-out credit of $20.0 million in the prior year that did not recur in the current period. The offsetting decrease of $5.8 million or 1.4% was primarily due to a prior year litigation reserve expense of $38.2 million related to our former Financial Services segment, decreases in fees and membership costs of $3.2 million, bad debt expense of $1.1 million, and other operating costs of $1.2 million, partially offset by an increase in professional consulting fees of $15.8 million, salaries and employee benefits of $12.3 million, a $6.5 million loss on the disposal of assets primarily due to a write-off of leasehold improvements related to our lease modification, increases in insurance expense of $2.0 million, and information technology expense of $1.3 million.

Depreciation and Amortization of Fixed Assets

Depreciation and amortization of fixed assets was $233.6 million for the year ended  December 31, 2024 compared to $206.8 million for the year ended December 31, 2023 , an increase of $26.8 million or 13.0%. The increase was primarily due to the timing of certain large internally developed software projects that were completed and placed into service in the prior year, partially offset by a decrease due to our recent disposition of $0.3 million.

Amortization of Intangible Assets

Amortization of intangible assets w as $72.3 million for the year ended  December 31, 2024 compared to $74.6 million for the year ended December 31, 2023 ,  a decrease of $2.3 million or 3.1%. The decrease was primarily due to intangible assets that were fully amortized, partially offset by an increase due to our recent acquisition of $0.3 million.

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Other Operating loss (income)

Other operating loss (income) was $12.1 million for the year ended  December 31, 2024 compared to $0.0 million for the year ended December 31, 2023 . The loss in the current year was driven by the sale of AER.

Net gain on Early Extinguishment of Debt

Net gain on early extinguishment of debt was $3.6 million for the year ended December 31, 2024 due to a cash tender offer of $400.0 million aggregate principal of our 2025 Senior Notes that was completed on June 7, 2024.

Investment Income (Loss) and Others, Net

Investment income (loss) and others, net was a gain of $95.7 million for the year ended  December 31, 2024 compared to a loss of $11.0 million f or the year ended December 31, 2023. The increase was primarily driven by net gains associated with the settlement of retained interests related to the prior sales of our healthcare business in 2016 and our specialized markets business in 2022, partially offset by the impact of foreign currencies.

Interest Expense, net

Interest expense was $124.6 million for the year ended  December 31, 2024 compared to $115.5 million for the year ended December 31, 2023 , an increase of $9.1 million or 7.9%. The increase in interest expense was primarily related to the issuance of our 2034 Senior Notes, offset by the cash tender that was completed on June 7, 2024.

Provision for Income Taxes

The provision for income taxes was $277.9 million for the year ended December 31, 2024  compared to $258.8 million for the year ended December 31, 2023 .  The effective tax rate was 22.6% for the year ended December 31, 2024 compared to 25.2% for the year ended December 31, 2023. The decrease in the effective tax rate in 2024 compared to 2023 was primarily due to tax charges incurred in structuring the sale of our Energy business in the prior year, as well as additional tax benefits recorded for capital losses that we were able to recognize due to capital gains arising from the settlement of our investments in non-public companies in the current year.

Net Income Margin

The net income margin for our consolidated results was 33.2% for the year ended  December 31, 2024 compared to 22.9% for the year ended December 31, 2023 .  The increase in net income margin was primarily driven by net gains associated with the settlement of retained interests related to the prior sales of our healthcare business in 2016 and our specialized markets business in 2022, the early extinguishment of debt, discussed above, and a prior year litigation reserve expense related to our former Financial Services segment, partially offset by the loss recognized on the sale of AER. The net income margin for December 31, 2023 included a loss from discontinued operations of $154.0 million, which negatively impacted our net income margin by 5.7%.

EBITDA Margin [1]

EBITDA was $1,659.1 million for the year ended   December 31, 2024 compared to $1,424.1 million for the year ended December 31, 2023. The EBITDA margin for our consolidated results was 57.6% for the year ended December 31, 2024 compared to 53.1% for the year ended December 31, 2023. The increase was primarily driven by strong revenue growth and cost discipline, a prior year litigation reserve expense related to our former Financial Services segment, and net gains associated with the prior sales of our healthcare business in 2016 and our specialized markets business in 2022.

[1] Note: Consolidated EBITDA margin, a non-GAAP measure, is calculated as a percentage of consolidated revenue. A reconciliation from net income to EBITDA is in the table below:

Year Ended December 31,

Net income

Less: Gain (loss) from discontinued operations, net of tax benefit (expense) of $6.8 and $(12.6), respectively

Income from continuing operations

Depreciation and amortization of fixed assets

Amortization of intangible assets

Interest expense, net

Provision for income taxes

EBITDA

Revenue

EBITDA margin

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Quarterly Results of Operations

The following tables set forth our quarterly unaudited consolidated statement of operations data for each of the eight quarters in the period ended December 31, 2025. In management's opinion, the quarterly data has been prepared on the same basis as the audited consolidated financial statements and includes all adjustments necessary to fairly state the periods presented.

March 31,

June 30,

September 30,

December 31,

(in millions, except for per share data)

Statement of operations data:

Revenues

Cost of revenue

Operating income

Net income attributable to Verisk

Basic earnings per share:

Net income attributable to Verisk

Diluted earnings per share:

Net income attributable to Verisk

March 31,

June 30,

September 30,

December 31,

(in millions, except for per share data)

Statement of operations data:

Revenues

Cost of revenue

Operating income

Income from continuing operations

Net income attributable to Verisk

Basic earnings per share:

Income from continuing operations

Net income attributable to Verisk

Diluted earnings per share:

Income from continuing operations

Net income attributable to Verisk

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Liquidity and Capital Resources

As of December 31, 2025 and 2024 , we had cash and cash equivalents and available-for-sale securities totaling $2,178.9 million and $292.5 million, respectively. We maintain our cash and cash equivalents in higher credit quality financial institutions in order to limit the amount of credit exposure. As of December 31, 2025  and December 31, 2024 , a vast majority of our domestic cash and cash equivalents is with TD Bank, N.A., and JPMorgan Chase N.A. Subscriptions for our solutions are billed and generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one year. Subscriptions are automatically renewed at the beginning of each calendar year. We have historically generated significant cash flows from operations. As a result of this factor, as well as the availability of funds under our Syndicated Revolving Credit Facility, we expect that we will have sufficient cash to meet our working capital and capital expenditure needs and to fuel our future growth plans.

We have historically managed the business with a working capital deficit due to the fact that, as described above, we offer our solutions and services primarily through annual subscriptions or long-term contracts, which are generally prepaid quarterly or annually in advance of the services being rendered. When cash is received for prepayment of invoices, we record an asset (cash and cash equivalents) on our balance sheet with the offset recorded as a liability (deferred revenues). This current liability is deferred revenue that does not require a direct cash outflow since our customers have prepaid and are obligated to purchase the services. In most businesses, growth in revenue typically leads to an increase in the accounts receivable balance causing a use of cash as a company grows. Unlike these businesses, our cash position is favorably affected by revenue growth, which results in a source of cash due to our customers prepaying for most of our services.

Our capital expenditures for the years ended December 31, 2025, 2024, and 2023 were $244.1 million, $223.9 million, and $230.0 million, respectively. Expenditures related to developing and enhancing our solutions are predominately related to internal-use software and are capitalized in accordance with ASC 350-40, Internal-use Software  ("ASC 350-40").

We have historically used a portion of our cash for repurchases of our common stock from our stockholders. For the years ended December 31, 2025, 2024, and 2023 , we repurchased $624.0 million, $1,005.0 million, and $2,762.3 million, respectively, of our common stock. For the years ended  December 31, 2025, 2024, and 2023 , we also paid dividends of $251.1 million, $221.3 million, and $196.8 million, respectively.

Financing and Financing Capacity

We had total deb t, excluding finance lease obligations, unamortized discounts and premium, and debt issuance costs, of $4,750.0 million and $3,050.0 million at December 31, 2025 and 2024 , respectively. The debt at  December 31, 2025 primarily consists of senior notes issued in 2025, 2024, 2023, 2020, 2019, and 2015. Interest on the senior notes is payable semi-annually each year. The unamortized discount and debt issuance costs were recorded as "Long-term debt" in the accompanying consolidated balance sheets, and will be amortized to "Interest expense, net" in the accompanying consolidated statements of operations within this Form 10-K over the life of the respective senior note. The indenture governing the senior notes restricts our ability to, among other things, create certain liens, enter into sale/leaseback transactions, and consolidate with, sell, lease, convey, or otherwise transfer all or substantially all of our assets, or merge with or into, any other person or entity. We have made, and may from time to time in the future make, optional repayments on our debt obligations, which may include repurchases or exchanges of our outstanding notes, depending on various factors, such as market conditions. Any such repurchases may be effected through privately negotiated transactions, market transactions, tender offers, redemptions or otherwise. See Note 15 . Debt for additional information on our financing activities.

We had a syndicated revolving credit facility ("Syndicated Revolving Credit Facility") with a borrowing capacity of $1,000.0 million with Bank of America N.A., HSBC Bank USA, N.A., JP Morgan Chase Bank, N.A., Wells Fargo Bank, National Association, Citibank, N.A., Morgan Stanley Bank, N.A., TD Bank, N.A., Goldman Sachs Bank USA, and the Northern Trust Company with a maturity date of April 5, 2028. On August 15, 2025, we entered into the Third Amended and Restated Credit Agreement (the "Amendment and Restatement") which amended and restated the Syndicated Revolving Credit Facility. The Amendment and Restatement increased our borrowing capacity to $1,250.0 million and extended the maturity date of the Syndicated Revolving Credit Facility to August 15, 2030. Interest on borrowings under the Amendment and Restatement is payable at an interest rate of SOFR plus 100.0 to 162.5 basis points, depending upon our public debt rating. A commitment fee on any unused commitment is payable periodically and may range from 8.0 to 17.5 basis points based upon our public debt rating. The Syndicated Revolving Credit Facility, as amended and restated by the Amendment and Restatement, also contains certain financial and other covenants that, among other things, impose certain restrictions on indebtedness, liens, dispositions, fundamental changes, and use of proceeds. The financial covenants require that, at the end of any fiscal quarter, we have a consolidated interest coverage ratio of at least 3.00 to 1.00, we have a consolidated funded debt leverage ratio of no more than 3.75 to 1.00. At our election, the maximum consolidated funded debt leverage ratio could be permitted to increase to 4.50 to 1.00 (no more than once) and to 4.25 to 1.00 (no more than once) in connection with the closing of a permitted acquisition. The Syndicated Revolving Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions, dividend payments, and the share repurchase program (the "Repurchase Program"). In connection with the Amendment and Restatement, we incurred additional debt issuance costs of $1.0 million, which will be amortized to 'Interest expense' within the accompanying consolidated statements of operations over the remaining life of the Syndicated Revolving Credit Facility. As of December 31, 2025 , we were in compliance with all financial and other debt covenants under our Syndicated Revolving Credit Facility. As of December 31, 2025 and 2024 , the available capacity under the Syndicated Revolving Credit Facility was $1,245.4 million and $995.4 million, which takes into account outstanding letters of credit of $4.6 million, respectively.

On August 15, 2025, we also entered into a $750.0 million Term Credit Agreement (the "Term Loan Facility") with Bank of America N.A. The Term Loan Facility had a maturity date of August 15, 2028 and carried an interest rate of SOFR plus 100.0 to 162.5 basis points, depending upon our public debt rating. The Term Loan Facility also contained certain financial and other covenants that, among other things, imposed certain restrictions on indebtedness, liens, dispositions, fundamental changes, and use of proceeds. The financial covenants required that, we have a consolidated interest rate coverage ratio of at least 3.00 to 1.00, and a consolidated funded debt leverage ratio of no more than 3.75 to 1.00. At our election, the maximum consolidated funded debt leverage ratio could be permitted to increase to 4.50 to 1.00 (no more than once) and to 4.25 to 1.00 (no more than once) in connection with the closing of a permitted acquisition. In connection with the Term Loan Facility, we incurred additional debt issuance costs of $5.8 million, which was amortized to "Interest expense, net" within the accompanying consolidated statements of operations over the remaining life of the Term Loan Facility. Pursuant to the terms of the Term Credit Agreement, the Term Loan Facility included a termination or reduction of commitments provision pursuant to which the lenders' commitments were subject to automatic termination upon the occurrence of the commitment termination date, which occurred on December 26, 2025 upon the termination of the acquisition agreement for the AccuLynx acquisition in accordance with its terms and, as a result, the commitment of each lender automatically terminated on such date, and the Term Loan Facility was terminated in full on December 26, 2025. Refer to Note 15. Debt for more information.

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Cash Flow

The following table summarizes our cash flow data for the years ended December 31:

(in millions)

Net cash provided by operating activities

Net cash (used in) provided by investing activities

Net cash provided by (used in) financing activities

Operating Activities

Net cash provided by operating activities was  $1,436.0  million for the year ended December 31, 2025  compared to $1,144.0  million for the year ended December 31, 2024 , an increase of $292.0  million, or 25.5% . The increase in operating cash flow was due to an increase in operating profit, the timing of certain cash tax payments, and higher interest income earned on cash balances.

Net cash provided by operating activities was  $1,144.0  million for the year ended December 31, 2024  compared to $1,060.7  million for the year ended December 31, 2023 , an increase of $83.3  million, or 7.9% .  The increase in operating cash flow was due to an increase in operating profit, offset by an increase in interest payments.

Investing Activities

Net cash used in investing activities of $358.1  million for the year ended December 31, 2025  was primarily related to capital expenditures of $244.1 million, acquisitions of $184.8 million, investments in non-public companies of $6.5 million, and escrow funding associated with acquisitions of $2.7 million, partially offset by proceeds from sale of our Verisk Marketing Solutions business of $80.0 million.

Net cash used in investing activities of $124.8  million for the year ended December 31, 2024  was primarily related to capital expenditures of $223.9 million and acquisitions, including a purchase of an additional controlling interest totaling $23.4 million, and investments in nonpublic companies of $1.0 million, partially offset by proceeds received upon settlement of our retained interests related to the prior sales of our healthcare business in 2016 and our specialized markets business in 2022 of $113.3 million, proceeds from sale of the AER Company of $6.4 million, and an escrow release associated with acquisitions of $3.8 million.

Net cash provided by investing activities of $2,746.5 million for the year ended  December 31, 2023 was primarily related to proceeds from the sale of our Energy business of $3,066.4 million, partially offset by capital expenditures of $230.0 million, and acquisitions, including escrow funding of $87.1 million.

Financing Activities

Net cash provided by financing activities of $795.2  million for the year ended December 31, 2025  was primarily driven by the proceeds from the issuance of short-term debt of $1,497.9 million, proceeds from the issuance of long-term debt of $698.3 million, and proceeds from stock options exercised of $56.9 million, partially offset by repurchases of common stock of $624.0 million, repayments of the current portion of long-term debt of $500.0 million, dividends paid of $251.1 million, the net share settlement of taxes from restricted stock and performance share awards of $26.7 million, payment of debt issuance costs of $25.4 million, payment of excise tax of $7.6 million, and other financing activities of $23.1 million.

Net cash used in financing activities of  $1,028.5  million for the year ended December 31, 2024  was primarily driven by the funding of $1,050.0 million of accelerated share repurchase programs, the payment on the early extinguishment of debt of $396.4 million, dividends paid of $221.3 million, and a payment of excise tax of $25.2 million, partially offset by the proceeds from the issuance of long-term debt, $590.2 million from the proceeds of loan-term debt net of original issuance discount, and proceeds from stock options exercised of $124.8 million.

Net cash used in financing activities of $3,786.5 million for the year ended  December 31, 2023 was primarily driven by the funding of $2,799.8 million in share repurchases, repayments of debt under our revolving credit and bilateral credit facilities of $1,265.0 million, and dividend payments of $196.8 million, partially offset by the proceeds from the issuance of our 2033 Senior Notes of $495.2 million, and proceeds from stock options exercised of $141.9 million.

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Contractual Obligations

The following table summarizes our contractual obligations at December 31, 2025 and the future periods in which such obligations are expected to be settled in cash:

Payments Due by Period

Total

Less than 1 year

2-3 years

4-5 years

More than 5 years

(in millions)

Contractual obligations

Long-term debt, current portion of long-term debt, and interest

Operating leases

Pension and postretirement plans (1)

Finance lease obligations

Total (2)

Our funding policy is to contribute at least equal to the minimum legal funding requirement.

Unrecognized tax benefits of approximately $8.6 million have been recorded as liabilities in accordance with ASC 740 , Income Taxes which have been omitted from the table above, and we are uncertain as to if or when such amounts may be settled, with the exception of those amounts subject to a statute of limitation, related to the unrecognized tax benefits, we also have recorded a liability for potential penalties and interest of $1.2 million.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and revenue and expenses during the reporting periods. These estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, including those related to stock-based compensation, internally developed software, goodwill and intangible assets, pension and other postretirement benefits, and income taxes. Actual results may differ from these assumptions or conditions.

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Stock-Based Compensation

Stock-based compensation cost, including nonqualified stock options, restricted stock, performance share units tied to the achievement of certain market performance conditions, namely relative total shareholder return as compared to the S&P 500 index ("TSR-based PSU's"), and performance share units tied to the achievement of certain financial performance conditions, namely incremental return on invested capital ("ROIC-based PSUs"), is measured at the grant date, based on the fair value of the awards granted, and is recognized as expense over the requisite service period. The fair value of stock options is measured using a Black-Scholes option-pricing model, which requires the use of several estimates, including expected term, expected risk-free interest rate, expected volatility, and expected dividend yield. The stock options have an exercise price equal to the adjusted closing price of our common stock on the grant date with a ten-year contractual term. The fair value of the restricted stock is determined using the closing price of our common stock on the grant date. The restricted stock is not assignable or transferable until it becomes vested. The fair value of TSR-based PSUs is determined on the grant date using the Monte Carlo Simulation model and their ultimate achievement is based on relative total shareholder return as compared to the companies that compromise the S&P 500 index. The fair value of ROIC-based PSUs is determined on the closing price of our common stock on the grant date and their ultimate achievement is tied to incremental return on invested capital based on net operating profit. Each of the TSR-based PSUs and ROIC-based PSUs has a three-year performance period, subject to the recipient's continued service. Each PSU represents the right to receive one share of our common stock and the ultimate realization is based on our achievement of certain market and financial performance criteria and may range from 0% to 200% of the recipient's target levels of 100% established on the grant date.

Option grants and restricted stock awards are generally expensed ratably over the four-year vesting period. PSUs are generally expensed ratably over the three-year vesting period. We follow the substantive vesting period approach which requires that stock-based compensation expense be recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service.

We estimate expected forfeitures of equity awards at the date of grant and recognize compensation expense only for those awards expected to vest. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate.

Internally Developed Software

We capitalize certain development costs incurred in connection with internally developed software. These capitalized costs primarily pertain to software hosted by us and accessed by customers. Costs during the initial development stages are expensed as they occur. Once an application reaches the development stage, both internal and external costs are capitalized if they are direct and incremental, until the software is substantially complete and ready for its intended use. Capitalization stops upon completion of all significant testing. Additionally, we capitalize costs associated with specific software upgrades and enhancements when the expenditures result in additional features and functionality. Once in service, internally developed software assets are assessed for recoverability and impairment whenever events or circumstances suggest their carrying amount may not be recoverable. Any impairment, as identified, is calculated as the difference between the asset’s carrying amount and its estimated fair value, using acceptable valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as circumstances require.

Goodwill and Intangibles

As of December 31, 2025, we had goodwill of $1,878.2 million, which represents 30.3% of our total assets. Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of June 30, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. When evaluating goodwill for impairment, we may decide to first perform a qualitative assessment, or “Step Zero” impairment test, to determine whether it is more likely than not 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 do not perform a qualitative assessment, or if we determine that it is more likely than not that the carrying amount 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, 2025, we completed our Step Zero impairment test at the reporting unit level and determined it was not more likely than not that the carrying values of our reporting units exceeded their fair values. We did not recognize any additional impairment charges related to our goodwill and indefinite-lived intangible assets. Subsequent to the test performed on June 30, 2025, we continued to monitor these reporting units for events that would trigger an interim impairment test; we did not identify any such events.

We allocate the fair value of the purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. The estimates used in valuing the intangible assets are determined with the assistance of third-party specialists, a discounted cash flow analysis and estimates made by management. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Pension and Postretirement

Certain assumptions are used in the determination of our annual net period benefit (credit) cost and the disclosure of the funded status of these plans. The principal assumptions concern the discount rate used to measure the projected benefit obligation and the expected return on plan assets. We revise these assumptions based on an annual evaluation of long-term trends and market conditions that may have an impact on the cost of providing retirement benefits.

In determining the discount rate, we utilize quoted rates from long-term bond indices, and changes in long-term bond rates over the past year, cash flow models and other data sources we consider reasonable based upon the life expectancy and mortality rate of eligible employees. As part of our ev aluation, we calculate the approximate average yields on securities that were selected to match our separate projected cash flows for both the pension and postretirement plans. Our separate benefit plan cash flows are input into actuarial models that include data for corporate bonds rated AA or better at the measurement date. The outputs from the actuarial models are assessed against the prior year’s discount rate and quoted rates for long-term bond indices. For our pension plans at December 31, 2025 , we determined this rate to be 5.42% and 5.64% at December 31, 2025 and 2024 , respectively. Our postretirement rate was 4.64% and 5.17% at December 31, 2025 and 2024 , respectively.

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The expected return on plan assets is determined by taking into consideration our analysis of our actual historical investment returns to a broader long-term forecast adjusted based on our target investment allocation, and the current economic environment. Our pension asset investment guidelines target an investment portfolio allocation of 60% debt securities and 40% equity securities. As of December 31, 2025, the pension plan assets were allocated 58.8% debt securities, 35.9% equity securities, 4.9% real estate and 0.4% other. The VEBA Plan target allocation is 100% debt securities. We have used our target investment allocation to derive the expected return as we believe this allocation will be retained on an ongoing basis that will be commensurate with the projected cash flows of the plan. The expected return for each investment category within our target investment allocation is developed using average historical rates of return for each targeted investment category, considering the projected cash flow of the qualified pension plan and postretirement plan. The difference between this expected return and the actual return on plan assets is generally deferred and recognized over subsequent periods through future net periodic benefit (credits) costs. We believe these considerations provide the basis for reasonable assumptions with respect to the expected long-term rate of return on plan assets.

When actual plan experience differs from the assumptions used, actuarial gains or losses arise. We amortize, as a component of annual pension expense, total outstanding actuarial gains or losses over the estimated average expected remaining lifetime of plan participants to the extent that the gain/loss exceeds 10% of the greater of the beginning-of-year projected benefit obligation or the market-related value of plan assets. For our pension and postretirement plans, the total actuarial losses as of December 31, 2025 that have not been recognized in annual expense are $111.0 million and $2.4 million, respectively, and we expect to recognize a net periodic pension and postretirement expenses of $3.6 million and $0.3 million, respectively, in 2026 related to the amortization of actuarial losses.

A one percent change in discount rate and future rate of return on plan assets would have the following effects:

Pension

Postretirement

1% Decrease

1% Increase

1% Decrease

1% Increase

Benefit (Credit) Cost

Projected Benefit Obligation

Benefit (Credit) Cost

Projected Benefit Obligation

Benefit (Credit) Cost

Projected Benefit Obligation

Benefit (Credit) Cost

Projected Benefit Obligation

Discount Rate

Expected Rate of Return on Assets

Income Taxes

In projecting future taxable income, we develop assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we use to manage the underlying businesses. The calculation of our tax liabilities also involves dealing with uncertainties in the application and evolution of complex tax laws and regulations in other jurisdictions.

We account for uncertain tax positions in accordance with Accounting for Uncertainty in Income Taxes — an interpretation of ASC 740 , which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this interpretation, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position.

We recognize and adjust our liabilities when our judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined.

As of December 31, 2025, we have gross federal, state, and foreign income tax net operating loss carryforw ards of $48.6  milli on, which will expire at various dates from 2026 through 2045. Such net operating loss carryforwards expire as follows:

Years Ending

(in millions)

Total

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, refer to Note 2(s) to the audited consolidated financial statements included in this annual report on Form 10-K.

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