Verisk Analytics (VRSK) Q2 2026: Revenue +4.4%, Net Income -9.8%, Interest Costs +48.7%
Verisk Analytics posted Q2 2026 revenue of $806.3 million, up 4.4% year-over-year, while net income fell 9.8% to $228.6 million. First-half share repurchases of $1,571.9 million drove stockholders' equity from a $309.0 million surplus into a $1,189.0 million deficit, and an expansion in net debt pushed interest expense up 48.7%. The failed AccuLynx acquisition triggered mandatory early redemption of $1.5 billion in senior notes, setting off a broad reconfiguration of the company's capital structure.
- Consolidated Balance Sheet Analysis
1-1. Key Asset Line Items
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change | Commentary |
|---|---|---|---|---|
| Cash and cash equivalents | 2,178.2 | 551.4 | -74.7% | Depleted by early bond redemption and share buybacks |
| Accounts receivable, net | 422.2 | 400.0 | -5.3% | Improved collections supporting operating CF |
| Property and equipment, net | 582.8 | 580.6 | -0.4% | CapEx and depreciation broadly in balance |
| Intangible assets, net | 346.6 | 313.5 | -9.5% | Ongoing amortization; no new acquisition to offset |
| Goodwill | 1,878.2 | 1,859.2 | -1.0% | Currency translation adjustment |
| Total assets | 6,195.5 | 4,495.9 | -27.4% | Asset contraction driven by cash depletion |
Key takeaway: Total assets contracted by roughly $1.7 billion ($1,699.6 million) in six months — not from any impairment, but because the $1.5 billion raised for the AccuLynx acquisition sat on the balance sheet at year-end 2025. After the deal collapsed (announced December 26, 2025), a mandatory redemption notice was issued December 29 and the actual repayment was executed January 6, 2026. The June 30, 2026, balance sheet is a reset snapshot after that full cycle.
1-2. Liability Structure
Financial liabilities (total $4,473.5 million vs. $4,737.2 million at prior year-end) - Current portion of long-term debt: $257.7 million (prior: $1,508.9 million, -82.9%) - Long-term debt: $4,215.8 million (prior: $3,228.3 million, +30.6%) - Total senior note face value: $4,250.0 million (prior: $4,750.0 million)
The pivotal event was the February 26, 2026, issuance of two new senior note tranches: $500 million at 4.450% due 2031 and $500 million at 5.125% due 2036, raising $1.0 billion in aggregate. Proceeds repaid the $750 million revolving credit facility and a portion of the term loan. Current debt dropped sharply, but the long-term senior note burden simply rolled forward, and total interest expense reached $52.8 million in Q2, up 48.7% from $35.5 million a year earlier.
Operating liabilities - Accounts payable and accrued liabilities: $254.3 million (prior: $319.1 million, -20.3%) - Deferred revenues, current (contract liabilities): $573.9 million (prior: $444.2 million, +29.2%)
The sharp rise in contract liabilities reflects advance subscription payments received in the first half. Given the subscription-based nature of the business, nearly all deferred revenue is expected to be recognized within 12 months — a strong forward revenue visibility signal.
1-3. Equity Structure
- Paid-in capital (common stock + APIC): $2,887.9 million (prior: $3,113.3 million)
- Retained earnings: $8,142.7 million (prior: $7,810.5 million)
- Treasury stock: ($12,301.7 million) — up $1,580.0 million from prior ($10,721.8 million)
- Total equity: ($1,189.0 million) — swung from a surplus of $309.8 million (including $0.8 million noncontrolling interest)
Retained earnings of roughly $8.1 billion reflect a strong cumulative earnings record, but aggressive buybacks have pushed treasury stock above retained earnings, producing a negative book value. This is a consequence of capital return policy, not earnings deterioration — the same pattern seen in S&P 500 large-caps such as AutoZone; Home Depot carried negative equity through 2022 before returning to positive book value.
- Consolidated Income Statement Analysis
2-1. Key Earnings Metrics
Quarterly results (Q2 2026 vs. Q2 2025)
| Item | Q2 2025 ($M) | Q2 2026 ($M) | Change |
|---|---|---|---|
| Revenue | 772.6 | 806.3 | +4.4% |
| Operating income | 354.3 | 363.7 | +2.7% |
| Operating margin | 45.9% | 45.1% | -0.8pp |
| Net income | 253.3 | 228.6 | -9.8% |
| Net margin | 32.8% | 28.4% | -4.4pp |
Segment revenue (Q2) - Underwriting: $569.1 million (+3.5%) - Claims: $237.2 million (+6.4%)
Claims outpaced Underwriting, reflecting rising demand for fraud detection and climate risk analytics. By geography, the U.S. generated $651.3 million (+3.8%), the U.K. $66.3 million (+5.1%), and other countries $88.7 million (+8.2%), with international growth outrunning domestic.
Three primary drivers of the net income decline: 1. Interest expense surge: $35.5 million → $52.8 million (+48.7%) — fallout from the 2031/2036 senior note issuance 2. Investment income swing to loss: $9.1 million gain → $7.5 million loss (including $6.5 million equity-method loss) 3. SG&A increase: $106.5 million → $128.6 million (+20.8%) 4. Higher effective tax rate: 22.7% → 24.6% (reduced stock-based compensation tax benefits)
2-2. Fixed vs. Variable Cost Analysis
Fixed-cost items (Q2) - Depreciation (property and equipment): $66.3 million (prior year: $66.0 million, +0.5%) - Amortization of intangibles: $14.3 million (prior year: $16.3 million, -12.3%) - SG&A: $128.6 million (prior year: $106.5 million, +20.8%) - Stock-based compensation: $14.7 million (prior year: $14.1 million)
Variable-cost items - Cost of revenues: $233.4 million (prior year: $229.5 million, +1.7%)
Revenue grew 4.4% while cost of revenues rose only 1.7%, producing positive operating leverage at the gross profit level. However, SG&A rising 20.8% offset that gain, trimming the operating margin from 45.9% to 45.1%. The filing does not break down the SG&A increase in detail; one-time advisory and restructuring costs tied to the failed acquisition are a plausible contributor.
- Cash Flow Analysis (First-Half Cumulative)
| Item | H1 2025 ($M) | H1 2026 ($M) | Change |
|---|---|---|---|
| Operating cash flow | 689.2 | 756.4 | +67.2 |
| Investing cash flow | (138.4) | (132.5) | +5.9 |
| Financing cash flow | (225.7) | (2,246.9) | -2,021.2 |
| Ending cash | 628.7 | 551.4 | -77.3 |
Detail: - Operating CF improvement (+9.7%) was driven by accounts receivable collections (receivables fell $12.8 million in the current period vs. a $179.7 million increase in the prior-year period) - CapEx was $132.1 million (+20.6%), reflecting higher software development and data infrastructure spending - Free cash flow (FCF) = $756.4M − $132.1M = $624.3 million (vs. $579.7 million in H1 2025, +7.7%) - Financing outflow of $2,246.9 million comprised: share repurchases $1,571.9 million + unsettled repurchases $255.1 million + mandatory senior note redemption $1,515.0 million − new senior note proceeds $999.0 million − net term loan increase $250.0 million
Income taxes paid were $143.6 million in the first half (+47.6% year-over-year), and interest paid was $112.2 million (+87.3%).
- Additional Key Analysis
① Residual impact of the failed AccuLynx acquisition The July 29, 2025, announcement of the ExactLogix (AccuLynx) acquisition was terminated December 26, 2025. Under the special mandatory redemption clause, the $1.5 billion in senior notes issued to fund the deal was fully repaid January 6, 2026. The lost acquisition eliminates one growth vector but frees up capital allocation capacity.
② Large-scale share repurchase program Through two accelerated share repurchase agreements — $1.5 billion in February and $200.0 million in June — plus open-market purchases of $126.1 million, the company bought back approximately 8.3 million shares in the first half, deploying $1,571.9 million in total. Shares outstanding fell from 138.4 million to 130.14 million, roughly a 6% reduction, supporting per-share earnings. On a first-half basis, net income fell 4.7% ($462.8 million vs. $485.6 million in H1 2025) while diluted EPS rose 0.9% ($3.48 vs. $3.45).
③ Rising contract liabilities — enhanced revenue visibility Per footnote disclosure, total contract liabilities (current and non-current combined) grew 30.5% over six months, from $446.2 million to $582.5 million. The company expects to recognize 99% of deferred revenue within 12 months, pointing to strong second-half revenue visibility. The increase reflects $943.6 million in new contract payments received in the first half, net of $806.3 million recognized as revenue and currency adjustments.
④ Growing interest burden Senior note maturities are staggered from 2029 through 2050, eliminating near-term repayment pressure. However, first-half interest expense of $96.0 million (+33.7%) is now a structural constraint on net income growth. The weighted-average interest rate on the $4.25 billion note portfolio is estimated at approximately 4.9%.
⑤ International revenue diversification International revenue accounts for 19.2% of the total (U.K. 8.2% + other 11.0%), still heavily weighted toward the U.S. However, the 8.2% growth rate in other countries outpaced the domestic 3.8%, signaling broadening demand for global risk analytics.
- Key Takeaways and Outlook
Verisk Analytics continues to operate at a roughly 45% operating margin — a utility-grade moat in insurance data infrastructure — but Q2 2026 marks an inflection point on two dimensions: quality of growth and capital structure reconfiguration.
Bull case: Subscription revenue visibility ($582.5 million in deferred revenue) combined with $624.3 million in first-half FCF supports continued buybacks. Claims segment growth of 6.4% outpacing Underwriting reflects durable structural demand in climate risk and fraud analytics.
Risk factors: (i) Interest expense will weigh on net income growth for the next four to five years; (ii) the collapse of the AccuLynx deal requires a reset of the inorganic growth roadmap; (iii) the negative book value warrants monitoring for any impact on credit ratings or future borrowing terms; (iv) the sustainability of the 20%-plus SG&A increase is unresolved.
Perspective for international investors: Samsung Fire & Marine Insurance and DB Insurance have been advancing data-driven underwriting (subject to confirmation in each company's IR disclosures), a trend that makes Verisk's sustained 45% operating margin a useful reference point as Korean insurtech names — including Kakao Pay Insurance and Bomap — approach the public markets. The Verisk model reinforces the thesis that insurance data infrastructure commands utility-like margins.
Disclaimer This report is prepared for informational purposes based on the Form 10-Q filed with the U.S. SEC for the quarter ended June 30, 2026, and does not constitute investment advice.