Verisk Analytics, Inc. (NASDAQ:VRSK) Retention Rates Top 98%

April 29, 2016

Jeff Fischer, Portfolio Manager at The Motley Fool, says Verisk Analytics, Inc. (NASDAQ:VRSK) has grown since going public in 2009, with recurring revenues at 75% and retention rates topping 98%.

[Verisk Analytics] was actually founded by its customers, much like MasterCard (NYSE:MA) and Visa (NYSE:V). In 1971, all the large insurance companies got together to found this company. And therefore, it has data on insurance risk and policy underwriting success, data going all the way back to 1971 that it now sells to its customers, which are almost all of the insurance providers and many financial institutions.

Verisk has four pillars to its success: its proprietary data that we just talked about; deep domain expertise in whatever industry it serves, whether it’s insurance or energy or health care, where it also operates; first-mover advantage, developing new analytical methods and being the first to perfect them; and then, it’s deeply embedded in its customer workflow so that it becomes an integral part of how a customer analyzes its risk.

The company has been able to grow smartly since it went public. And even in 2008 and 2009, it was able to put through price increases, and that shows it’s really a key to how its customers operate. It has about 75% of its revenues on a renewal basis. It just keeps getting renewed again and again, with retention rates topping 98%. So that’s the type of company we like to look for, a company with naturally recurring revenue or subscription revenue and high retention.

Jeff Fischer