Verisk Analytics: A Steady Beacon in the AI Storm

The market’s obsession with AI-driven disruption has sent investors scrambling for the next "moonshot" stock. But while the world chases fleeting tech trends, one overlooked company—Verisk Analytics (VRSK)—is quietly delivering steady growth through its ironclad dominance in data-driven insurance solutions. With 7% revenue growth in Q1 2025 and a 23% year-to-date stock return, Verisk proves that resilience in a niche can outperform hype in a crowded sector. Let’s dissect why this is a buy now.

The Contrarian Play: Why TimesSquare Capital Loves VRSK

TimesSquare Capital Management, a fund known for its growth-oriented, research-heavy approach, has quietly doubled down on Verisk despite prioritizing AI stocks in its Q1 2025 strategy. Their rationale? Resilience in a volatile market.

Verisk’s subscription-based revenue engine (83% of total sales) grows steadily at 10.6% annually, insulated from the whims of discretionary spending. Even as transactional revenue dipped in non-insurance segments, the core business—the backbone of catastrophe modeling, fraud detection, and underwriting tools—kept profits humming. Adjusted EBITDA rose 9.5% to $391 million, while free cash flow surged 23%, funding both dividends and buybacks.

The fund’s Q1 letter highlights Verisk’s underappreciated valuation: only 40 hedge funds held the stock at last count, despite its $43 billion market cap. This "hidden gem" status offers a rare combination of stability and growth in a sector starved for both.

Data-Driven Dominance: How Verisk Owns Insurance Tech

Verisk isn’t just a data company—it’s the operating system of the insurance industry. Its platforms, like Xactimate (used by 80% of U.S. property insurers) and Symplitium (acquired to boost claims automation), are mission-critical tools. Even in a soft insurance market, clients can’t walk away from these mission-critical solutions.

The numbers back this thesis:
- Storm-driven tailwinds: Convective storms and hurricane prep boosted property-estimating revenue.
- Margin expansion: A 55.3% EBITDA margin (up 130 bps YoY) shows pricing power.
- Dividend strength: A 15% dividend hike to $0.45/share, with a buyback of $200 million, signals confidence.

While AI stocks flirt with 100% volatility, Verisk’s returns are built on recurring revenue and low churn—a stark contrast to the "spray-and-pray" AI models dominating headlines.

Why Now? The AI Hype vs. Verisk’s Reality

The market’s AI obsession has created a perfect opportunity to buy Verisk at a discount. Here’s why:

1. Valuation sanity check: At 23x forward earnings, VRSK trades at a discount to pure-play SaaS firms. Its 23% YTD return lags behind AI darlings, but its risk profile is a fraction of theirs.
2. Regulatory tailwinds: Rising scrutiny of AI "black boxes" will push insurers toward transparent, data-backed tools—Verisk’s specialty.
3. Contrarian positioning: TimesSquare’s Q1 focus on VRSK (despite favoring AI) suggests the stock is undervalued relative to its growth trajectory.

The Bottom Line: Don’t Chase Hype—Buy Resilience

Verisk isn’t the sexiest play. But in a market where AI stocks are overvalued and overhyped, its 7% organic revenue growth and 23% YTD returns are a masterclass in steady compounding. With $3.03 billion to $3.08 billion in full-year revenue guidance and a dividend yield of 0.57%, this is a stock built for investors who value consistency over flash.

The takeaway? Buy Verisk now. Let the AI crowd speculate—this is where the real money is made.

Disclosure: The author holds no position in VRSK at the time of writing.