Q2 2026 Verisk Analytics Inc Earnings Call

July 29, 2026

Speaker #1: Good day, everyone, and welcome to the Vesk Q2 2026 earnings results conference hall. This call is being recorded. Currently, all participants are in a listen-only mode.

Speaker #1: After today's prepared remarks, we will conduct a Q&A session where we will limit participants to 1 question so that we can allow everyone to ask a question.

Speaker #1: We will have further instructions for you at that time. For opening remarks and introductions, I would like to turn the call over to Vesk's Senior Vice President of Finance and Investor Relations, Ms. Stacey Brodbar.

Speaker #1: Good day, everyone, and welcome to the Verisk second quarter 2026 earnings results conference call. This call is being recorded. Currently, all participants are in a listen-only mode.

Speaker #1: Ms. Brodbar, please go ahead.

Speaker #2: Thank you, Operator, and good day, everyone. We appreciate you joining us today for a discussion of our Q2 2026 financial results. On the call today are Lee Schabel, Vesk's President and Chief Executive Officer, and Elizabeth Mann, Chief Financial Officer.

Speaker #1: After today's prepared remarks, we will conduct a question-and-answer session where we will limit participants to one question so that we can allow everyone to ask a question.

Speaker #2: The earnings release referenced on this call, as well as our traditional quarterly earnings presentation, and the associated interview, can be found in the Investor section of our website vesks.com.

Speaker #1: We will have further instructions for you at that time. For opening remarks and introductions, I would like to turn the call over to Verisk Senior Vice President of Finance and Investor Relations, Ms. Stacey Brodbar.

Speaker #2: The earnings release has also been attached to an 8-K that we have furnished to the SEC. A replay of this call will be available for 30 days on our website and by dial-in.

Speaker #1: Ms. Brodbar, please go ahead.

Speaker #2: Thank you, Operator, and good day, everyone. We appreciate you joining us today for a discussion of our second quarter 2026 financial results. On the call today are Lee Shavel, Verisk President and Chief Executive Officer, and Elizabeth Mann, Chief Financial Officer.

Speaker #2: As set forth in more detail in today's earnings release, I will remind everyone that today's call may include forward-looking statements about Vesk's future performance—including those related to our financial guidance.

Speaker #2: Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance is contained in our recent SEC filing.

Speaker #2: The earnings release referenced on this call, as well as our traditional quarterly earnings presentation, and the associated 10-Q, can be found in the Investor section of our website verisk.com.

Speaker #2: A reconciliation of reported and historic non-GAAP financial measures discussed on this call is provided in our 8-K and today's earnings presentation posted on the Investor section of our website vesks.com.

Speaker #2: The earnings release has also been attached to an 8K that we have furnished to the SEC. A replay of this call will be available for 30 days on our website and by dial-in.

Speaker #2: However, we are not able to provide a reconciliation of projected adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS to the most directly comparable expected GAAP results because of the unreasonable effort and high unpredictability of estimating certain items that are excluded from projected non-GAAP adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS, including for example tax consequences, acquisition-related costs, gains-and-loss dispositions, and other non-recurring expenses.

Speaker #2: As set forth in more detail in today's earnings release, I will remind everyone that today's call may include forward-looking statements about Verisk's future performance—including those related to our financial guidance.

Speaker #2: A reconciliation of reported and historic non-GAAP financial measures discussed on this call is provided in our 8K and today's earnings presentation posted on the Investor section of our website verisk.com.

Speaker #2: The effect of which may be significant. And now I'd like to turn the call over to Lee Schabel.

Speaker #3: Thanks, Stacey. Good morning, everyone, and thank you for joining us. Today I will provide a broad overview of our Q2 financial results. I will also offer perspective on our industry engagement, including client discussions, focused on the use of advanced technologies—including the evolution of AI and the current operating environment.

Speaker #2: However, we are not able to provide a reconciliation of projected adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS to the most directly comparable expected GAAP result because of the unreasonable effort and high unpredictability of estimating certain items that are excluded from projected non-GAAP adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS, including for example tax consequences, acquisition-related costs, gains and loss from dispositions, and other non-recurring expenses, the effect of which may be significant.

Speaker #3: Finally, I will wrap up with some updates on recent groundbreaking innovations we have introduced into the market, including the release of Vesk Synergy Studio for the catastrophe risk market.

Speaker #3: I will then hand the call over to Elizabeth for more detail in her financial review. Turning to our Q2 results, Vesk delivered organic constant currency revenue growth of 5.8%, with balanced growth across underwriting and claims, and demonstrating the sequential acceleration that we previously anticipated.

Speaker #2: And now I'd like to turn the call over to Lee Shavel.

Speaker #3: Thanks, Stacey. Good morning, everyone, and thank you for joining us. Today, I will provide a broad overview of our second quarter financial results. I will also offer perspective on our industry engagement, including client discussions focused on the use of advanced technologies—including the evolution of AI and the current operating environment.

Speaker #3: Revenue growth was underpinned by an 8% increase in subscription revenues. Demonstrating the stability and value of the solutions we provide to the insurance industry, helping them make better decisions.

Speaker #3: Finally, I will wrap up with some updates on recent groundbreaking innovations we have introduced into the market, including the release of Verisk Synergy Studio for the catastrophe risk market.

Speaker #3: These are supported by our broad connectivity and deep client relationships we have within the industry. Our focus on efficiency and cost discipline drove organic constant currency adjusted EBITDA growth of 7.4%, delivering another quarter of very healthy margins.

Speaker #3: I will then hand the call over to Elizabeth for more detail in her financial review. Turning to our second quarter results, Verisk delivered organic constant currency revenue growth of 5.8%, with balanced growth across underwriting and claims, and demonstrating the sequential acceleration that we previously anticipated.

Speaker #3: Growth was modestly ahead of our expectations, and reflected the short-term factors we previously described, namely the carryover impact of the very low weather activity, tough compares from strong renewals last year, and a work stoppage in a federal government contract.

Speaker #3: Revenue growth was underpinned by an 8% increase in subscription revenues, demonstrating the stability and value of the solutions we provide to the insurance industry, helping them make better decisions.

Speaker #3: We continue to have confidence that the resolution of these short-term factors and core growth momentum will result in continued sequential improvement in revenue growth as we move through the second half of the year.

Speaker #3: Moreover, we expect 2026 to be another year of performance in line with our investor day targets and reaffirm our 2026 financial guidance. Throughout the quarter, our client engagement was very active.

Speaker #3: Growth was modestly ahead of our expectations, and reflected the short-term factors we previously described, namely the carryover impact of the very low weather activity—tough compares from strong renewals last year—and a work stoppage in a federal government contract.

Speaker #3: We held several executive sessions across underwriting with top national and regional carriers discussing how we can support clients in the current operating environment, as well as our broader strategic plans including our AI strategy.

Speaker #3: Additionally, we hosted client-specific emerging issues workshops within underwriting, focusing on topics including data centers, AI risks, and regulations, and quantum computing, where we discussed company-specific exposures.

Speaker #3: Moreover, we expect 2026 to be another year of performance in line with our investor-day targets, and reaffirm our 2026 financial guidance. Throughout the quarter, our client engagement was very active.

Speaker #3: For one top 20 carrier, we hosted 3 different sessions on artificial intelligence that were attended by almost 400 underwriting professionals across the rent abroads.

Speaker #3: We held several executive sessions across underwriting with top national and regional carriers, discussing how we can support clients in the current operating environment, as well as our broader strategic plans, including our AI strategy.

Speaker #3: These engagements are a further demonstration of the critical role we play in the industry through our deep industry expertise data analytics and thought leadership.

Speaker #3: That same combination is why we continue to win new data contributions. So far this year, we have onboarded 8 new core lines contributors, and 10 contributors to our new excess and surplus data set.

Speaker #3: Additionally, we hosted client-specific emerging issues workshops, with an underwriting focusing on topics including data centers, AI risks, and regulations, and quantum computing, where we discussed company-specific exposures.

Speaker #3: And with those excess and surplus contributors now online, our data set covers over 18 billion in historical and current premium. Specific to the operating environment, the first half of 2026 has continued on the trends experienced in 2025, namely improved combined ratios and robust industry profitability.

Speaker #3: For one top 20 carrier, we hosted three different sessions on artificial intelligence that were attended by almost 400 underwriting professionals across the rent abroads.

Speaker #3: These engagements are a further demonstration of the critical role we play in the industry through our deep industry expertise data analytics and thought leadership.

Speaker #3: Helped by unusually low catastrophe losses. In fact, 2026 is currently tracking for global catastrophe losses to be below the $100 billion mark for the first time since 2020.

Speaker #3: That same combination is why we continue to win new data contributions. So far this year, we have onboarded eight new core lines contributors and ten contributors to our new excess and surplus data set.

Speaker #3: With profitability improvements and rate adequacy satisfied across many lines, carriers have turned their attention to driving growth, resulting in price competition and softening markets.

Speaker #3: And with those excess and surplus contributors now online, our data set covers over $18 billion in historical and current premium. Specific to the operating environment, the first half of 2026 has continued on the trends experienced in 2025—namely, improved combined ratios and robust industry profitability.

Speaker #3: As we mentioned last quarter, this dynamic is most pronounced in property, and commercial property in particular, where pricing is soft and volumes are lighter.

Speaker #3: We continue to watch how these dynamics shape client activity—particularly as it relates to transactional usage. It is in these types of markets that carriers are increasingly focused on underwriting discipline and risk selection rather than relying on broad-based rate increases.

Speaker #3: Helped by unusually low catastrophe losses. In fact, 2026 is currently tracking for global catastrophe losses to hit the billion mark for the first time since 2020.

Speaker #3: Our comprehensive data sets and analytic insights underpinned by our continued investments in data currency and data coverage can best help segment and understand risk.

Speaker #3: As we mentioned last quarter, this dynamic is most pronounced in property, and commercial property in particular, where pricing is soft and volumes are lighter.

Speaker #3: Hoping our clients navigate through these dynamic times. In our conversations with clients, AI remains one of the most important topics and Vesk has partnered with the industry to help them move from experimentation into production deployments and ultimately to scale adoption when the industry is ready.

Speaker #3: We continue to watch how these dynamics shape client activity—particularly as it relates to transactional usage. It is in these types of markets that carriers are increasingly focused on underwriting discipline and risk selection, rather than relying on broad-based rate increases.

Speaker #3: As carriers expand their use of AI, they continue to turn to Vesk as the trusted source of data in the industry. Currently, those conversations are increasingly centered on accuracy, efficiency, and repeatability as well as driving return on investment from their investments.

Speaker #3: Our comprehensive data sets and analytic insights, underpinned by our continued investments in data currency and data coverage, can best help segment and understand risk.

Speaker #3: To meet these needs, we are investing in techniques such as retrieval-augmented generation or RAG, and broader context engineering capabilities that help improve the quality of AI-driven outputs by better managing how large language models access, interpret, and apply information.

Speaker #3: Hoping our clients navigate through these dynamic times. In our conversations with clients, AI remains one of the most important topics and Verisk has partnered with the industry to help them move from experimentation into production deployments and ultimately to scaled adoption when the industry is ready.

Speaker #3: This is all further enhanced by our highly cleansed and structured data sets and deep industry expertise, which is leveraged through the semantic layer of AI processes where we provide data structure, context and rules that make large language models work more effectively to deliver consistent and predictable outcomes.

Speaker #3: As carriers expand their use of AI, they continue to turn to Verisk as the trusted source of data in the industry, currently those conversations are increasingly centered on accuracy, efficiency, and repeatability as well as driving return on investment from their investments.

Speaker #3: More importantly, our goal is not simply to adopt the latest AI tools, but to apply them in ways that deliver measurable return on investment and value for clients by combining advanced AI capabilities with Vesk's high-quality and proprietary data assets deep industry expertise and established industry-standard workflows.

Speaker #3: This is all further enhanced by our highly cleansed and structured data sets and deep industry expertise, which are leveraged through the semantic layer of AI processes. Here, we provide data structure, context, and rules that make large language models work more effectively to deliver consistent and predictable outcomes.

Speaker #3: While also creating connections across the broader ecosystem. We believe this positions us well to help clients navigate the next phase of AI adoption, while strengthening Vesk's role as a trusted strategic partner across the insurance ecosystem.

Speaker #3: As a specific example, in May, we announced our first collaboration with Anthropic, launching 2 Vesk MCP connectors for Claude, which bring our trusted regulatory-grade data and analytics directly into conversational AI workflows in an underwriting and claims use case.

Speaker #3: More importantly, our goal is not simply to adopt the latest AI tools, but to apply them in ways that deliver measurable return on investment and value for clients by combining advanced AI capabilities with Verisk's high-quality and proprietary data assets, deep industry expertise, and established industry-standard workflows.

Speaker #3: These connectors enable clients to interact with Vesk's proprietary underwriting intelligence and claims solutions using natural language, helping them access insights when, where, and how they need them.

Speaker #3: while also creating connections across the broader ecosystem. We believe this positions us well to help clients navigate the next phase of AI adoption, while strengthening Verisk's role as a trusted strategic partner across the insurance ecosystem.

Speaker #3: These connectors were developed in partnership with Anthropic on an expedited timeline from initial discussion to production. And public launch. And we are the first insurance data provider with MCPs available with Claude.

Speaker #3: As a specific example, in May, we announced our first collaboration with Anthropic, launching two Verisk MCP connectors for Claude, which bring our trusted regulatory-grade data and analytics directly into conversational AI workflows in underwriting and claims use cases.

Speaker #3: This was made possible by the earlier foundational investments we made in data organization and infrastructure, making our data entirely AI-ready. As well as experimentation and development of independent large language model applications.

Speaker #3: These connectors enable clients to interact with Verisk's proprietary underwriting intelligence and claims solutions using natural language, helping them access insights when, where, and how they need them.

Speaker #3: Importantly, the architecture is designed to maintain the governance, security, and trust our clients expect, with data retrieved only within the client's Claude session and not used for model training.

Speaker #3: These connectors were developed in partnership with Anthropic on an expedited timeline, from initial discussion to production and public launch. We are the first insurance data provider with MCPs available with Claude.

Speaker #3: Interest levels across our client engagement are building along with usage. With a top-10 carrier, already using the MCP. We're excited by the early client feedback we've received and we are actively developing additional connectors, both with Anthropic and with other frontier model companies that can deliver value to our clients.

Speaker #3: Additionally, we are excited by the opportunities to develop a gentic capabilities in coordination with and on behalf of our clients. Last quarter, we disclosed one of those initiatives to develop a next-generation digitally native agentic underwriting platform with a global insurance firm.

Speaker #3: And we are excited with the progress that we are making. We are also in the development stage of agentic capabilities in our life solutions, that will build on our conversational ask-max feature to embed autonomous capabilities within the platform.

Speaker #3: Interest levels across our client engagement are building along with usage. With a top-10 carrier already using the MCP. We're excited by the early client feedback we've received and we are actively developing additional connectors.

Speaker #3: We're also encouraged by the early traction we're seeing with our generative AI solutions that have had scaled engagement and premium audit AI is a good example.

Speaker #3: Both with Anthropic and with other frontier model companies that can deliver value to our clients. Additionally, we are excited by the opportunities to develop agentic capabilities in coordination with and on behalf of our clients.

Speaker #3: Premium audit AI brings natural language access to our premium audit rules and classification content, directly into our client's underwriting and audit workflows. It's still early as we are now in the first renewal cycle post the launch, but we're beginning to see it show up commercially.

Speaker #3: Last quarter we disclosed one of those initiatives to develop a next-generation digitally native agentic underwriting platform with a global insurance firm. And we are excited with the progress that we are making.

Speaker #3: The incremental value we have added is supporting stronger renewal growth. It's a proof point for how we're embedding AI into our proprietary content to make our offerings more valuable to clients.

Speaker #3: We are also in the development stage of agentic capabilities in our life solutions that will build on our conversational Ask-Max feature to embed autonomous capabilities within the platform.

Speaker #3: In our claims business, we continue to see strong momentum in exact AI, which we launched in the fourth quarter of 2025 and have continued to enhance with new capabilities.

Speaker #3: We're also encouraged by the early traction we're seeing with our generative AI solutions that have had scaled engagement and premium audit AI is a good example.

Speaker #3: Premium Audit AI brings natural language access to our premium audit rules and classification content directly into our clients' underwriting and audit workflows. It's still early, as we are now in the first renewal cycle post-launch, but we're beginning to see it show up commercially.

Speaker #3: Exact AI embeds AI directly into the workflows of insurers, adjusters, and restoration professionals, helping clients automate time-consuming tasks such as summarizing claim information, labeling photos, extracting key data from documents, and generating estimating recommendations.

Speaker #3: The result is faster claims handling, improved productivity, and more consistent outcomes for policyholders. Adoption has accelerated significantly. Since March, the number of exact AI users has increased nearly 10 times, and we now have almost 7,000 licensees on the platform.

Speaker #3: In our claims business, we continue to see strong momentum in exact AI. Which we launched in the fourth quarter of 2025 and have continued to enhance with new capabilities.

Speaker #3: The feedback from clients has been overwhelmingly positive, with strong demand for additional functionality. As a result, we are continuing to invest in our innovation roadmap and expand exact AI capabilities across the broader exactware suite, helping clients realize even greater efficiency and value from their claims operations.

Speaker #3: The result is faster claims handling, improved productivity, and more consistent outcomes for policyholders. Adoption has accelerated significantly. Since March, the number of Exact AI users has increased nearly tenfold, and we now have almost 7,000 licensees on the platform.

Speaker #3: The rapid adoption we are seeing reinforces our conviction that AI will become an increasingly important driver of efficiency, consistency, and better outcomes across the property claims lifecycle.

Speaker #3: During the quarter, we also reached an important milestone in our catastrophe and risk solutions business. With the on-time and on-budget launch of our re-engineered US tropical cyclone model, and Vesk synergy studio, our new cloud-native platform for integrated catastrophe modeling and risk analytics.

Speaker #3: The feedback from clients has been overwhelmingly positive, with strong demand for additional functionality. As a result, we are continuing to invest in our innovation roadmap and expand Exact AI capabilities across the broader Exactware suite, helping clients realize even greater efficiency and value from their claims operations.

Speaker #3: Our updated US tropical cyclone model redefines US hurricane risk modeling, by integrating significant advances in climate science, hazard modeling, and vulnerability analytics to provide a more accurate, transparent, and realistic view of individual risk and portfolio exposure across insurance, reinsurance, and capital markets.

Speaker #3: During the quarter, we also reached an important milestone in our catastrophe and risk solutions business. With the on-time and on-budget launch of our re-engineered US tropical cyclone model, and Verisk synergy studio, our new cloud-native platform for integrated catastrophe modeling and risk analytics.

Speaker #3: Specifically, the model includes key scientific advancements which provide a more physically realistic view of how tropical cyclones evolve including the impacts of wind, storm surge, and inland flooding.

Speaker #3: Additionally, as catastrophe models are used to increasingly inform decisions in industries outside of insurance, including housing, infrastructure, capital markets, and climate risk disclosure, this new updated model is designed to support risk evaluations with results that can be used across all segments.

Speaker #3: Vesk synergy studio are cloud-native platform is designed to help clients make better decisions in an increasingly complex risk environment. The platform brings together advanced analytics, high-performance computing, and modern workflows in a single environment.

Speaker #3: Specifically, the model includes key scientific advancements, which provide a more physically realistic view of how tropical cyclones evolve, including the impacts of wind, storm surge, and inland flooding.

Speaker #3: Allowing clients to analyze larger and more complex portfolios generate insights faster, and better understand the drivers of risk and loss across their exposures. The first release of Vesk synergy studio includes our complete global model suite, in our latest next-generation modeling framework.

Speaker #3: Additionally, as catastrophe models are increasingly used to inform decisions in industries outside of insurance—including housing, infrastructure, capital markets, and climate risk disclosure—this new, updated model is designed to support risk evaluations with results that can be used across all segments.

Speaker #3: Giving our clients immediate access to our latest views of catastrophe risk for every model around the world. This allows clients to run more sophisticated analyses evaluate risk more efficiently, and make more informed underwriting and capital allocation decisions without having to navigate a patchwork of model vintages.

Speaker #3: Verisk Synergy Studio, our cloud-native platform, is designed to help clients make better decisions in an increasingly complex risk environment. The platform brings together advanced analytics, high-performance computing, and modern workflows in a single environment.

Speaker #3: Allowing clients to analyze larger and more complex portfolios generate insights faster, and better understand the drivers of risk and loss across their exposures. The first release of Verisk synergy studio includes our complete global model suite, in our latest next-generation modeling framework.

Speaker #3: By combining leading science with modern technology, we are helping clients gain deeper insights into risk while improving the speed, scale, and transparency of their workflows.

Speaker #3: We have already onboarded our first clients onto the system, and the initial feedback on performance, scalability, and keeping our commitment to deliver on the schedule we promised has been incredibly positive.

Speaker #3: We have a robust pipeline of additional clients scheduled to migrate to the platform through the remainder of the year. As a further enhancement to our catastrophe risk solutions business, we closed this week on the strategic tuck-in acquisition of McKinsey Intelligence Services, a geospatial intelligence and event response company specializing in global real-time catastrophe and conflict event analysis.

Speaker #3: By combining leading science with modern technology, we are helping clients gain deeper insights into risk while improving the speed, scale, and transparency of their workflows.

Speaker #3: MIS will become part of Vesk catastrophe and risk solutions. We believe that the strategic combination of MIS's real-time geospatial intelligence together with Vesk's catastrophe models risk analytics, weather analytics, and claim solutions will give clients a more complete view of unfolding events so they can assess impacts, prioritize response, and support stakeholders more effectively.

Speaker #3: Before I close, I want to announce that Nick Defond, our chief information officer, is leaving Vesk after two decades. I want to thank Nick for his partnership and key contributions to Vesk, which include leading the modernization of our computing platform, successfully migrating from the mainframe to the cloud, strengthening the infrastructure supporting reliable delivery of client solutions, and helping position the company well for this next phase of AI innovation.

Speaker #3: MIS will become part of Verisk catastrophe and risk solutions. We believe that the strategic combination of MIS's real-time geospatial intelligence together with Verisk's catastrophe models risk analytics, weather analytics, and claim solutions will give clients a more complete view of unfolding events so they can assess impacts, prioritize response, and support stakeholders more effectively.

Speaker #3: With Nick's departure, Jeff Negret, our CTO, will step into the role of interim chief information officer. We are confident in the bench strength we have in place within our corporate IST organization and will commence a search for a permanent replacement.

Speaker #3: Before I close, I want to announce that Nick DeFon, our chief information officer, is leaving Verisk after two decades. I want to thank Nick for his partnership and key contributions to Verisk, which include leading the modernization of our computing platform, successfully migrating from the mainframe to the cloud, strengthening the infrastructure supporting reliable delivery of client solutions, and helping position the company well for this next phase of AI innovation.

Speaker #3: I'll turn the call over to Elizabeth.

Speaker #1: Thanks, Lee, and good day to everyone on the call. On consolidated and gap basis, second quarter revenue was $806 million, up 4% versus the prior year.

Speaker #1: Reflecting contribution from both underwriting and claim. Net income was $229 million, a 10% decrease versus the prior year, while diluted gap earnings per share were $1.75, down 3% versus the prior year.

Speaker #1: The decrease in net income and diluted gap EPS was driven by a divestiture at the end of 2025, as well as a higher year-over-year tax rate increased interest expense and higher legal fees incurred in connection with ongoing litigation.

Speaker #3: I'll now turn the call over to Elizabeth.

Speaker #1: Thanks, Lee, and good day to everyone on the call. On a consolidated and gap basis, second quarter revenue was $806 million, up 4% versus the prior year.

Speaker #1: This was offset in part by higher operating results and a lower average share count. Moving to our organic constant currency results, adjusted for non-operating items as defined in the non-gap financial measures section of our press release, our operating results demonstrate continued solid growth across both underwriting and claim.

Speaker #1: In the second quarter, OCC revenues grew 5.8%, compounding on the 7.9% OCC revenue growth in the prior year period. This was a sequential improvement from the first quarter in both underwriting and claim.

Speaker #1: The decrease in net income and diluted gap EPS was driven by a divestiture at the end of 2025, as well as a higher expense and higher legal fees incurred in connection with ongoing litigation.

Speaker #1: With reported OCC growth of 5.6% in underwriting and 6.1% in claim. The quarter's performance was modestly better than our expectations, primarily due to stronger-than-expected insurance-linked securitization activity.

Speaker #1: This was offset in part by higher operating results and a lower average share count. Moving to our organic constant currency results, adjusted for non-operating items as defined in the non-GAAP financial measures section of our press release, our operating results demonstrate continued solid growth across both underwriting and claim.

Speaker #1: The reported results continue to be impacted by the continued carryover effect of a lower level of weather-related events last year, as well as the work stoppage in a federal government contract.

Speaker #1: Subscription revenues, which comprised $83% of total revenue in the quarter, grew 8% on an OCC basis. Compounding the 9.3% growth in the prior year period.

Speaker #1: The growth in subscription revenue was driven by strength across our largest subscription-based businesses, including Forms Rules and Loss Costs, Catastrophe and Risk Solutions, and Anti-Fraud Analytics.

Speaker #1: With reported OCC growth of 5.6% in underwriting, and 6.1% in claim. The quarter's performance was modestly better than our expectations, primarily due to stronger-than-expected insurance-linked securitization activity.

Speaker #1: And reflects strong price realization and renewals, expanded relationships with existing clients, and the addition of new logos. The resilience of our subscription revenue underscores the strength of our business model and the critical value our solutions deliver to clients.

Speaker #1: Subscription revenues, which comprised $83% of total revenue in the quarter, grew 8% on an OCC basis. Compounding the 9.3% growth in the prior year period.

Speaker #1: Informed Rules and Loss Costs are investment in core lines reimagined continues to drive strong price realization through subscription renewals, as clients experience the additional value we can provide through the transformation of the platform.

Speaker #1: The growth in subscription revenue was driven by strength across our largest subscription-based businesses, including forms, rules, and loss costs, catastrophe and risk solutions, and anti-fraud analytics.

Speaker #1: During the quarter, we released another seven new client-facing modules, and remain on track for 25 releases in 2026, delivering even further platform functionality and value to our clients.

Speaker #1: And reflect strong price realization in renewals, expanded relationships with existing clients, and the addition of new logos. The resilience of our subscription revenue underscores the strength of our business model and the critical value our solutions deliver to clients.

Speaker #1: Within catastrophe and risk solutions, we delivered another quarter of strong growth, driven by the addition of new clients and some notable renewals that provide upside to multi-year growth.

Speaker #1: As Lee mentioned, we are excited to announce the launch of Vesk Synergy Studio in June, with our first clients already onboarded and a pipeline for additional clients to migrate onto the platform.

Speaker #1: Informed rules and loss costs, our investment in core lines reimagined, continues to drive subscription renewals as clients experience the additional value we can provide through the transformation of the platform.

Speaker #1: Additionally, we released our re-engineered US Tropical Cyclone model, which delivers comprehensive advances in how hurricane risk is quantified and applied, and is exclusively available through Vesk Synergy Studio.

Speaker #1: During the new client-facing modules, we remain on track for 25 releases in 2026, delivering even further platform functionality and value to our clients. Within Catastrophe and Risk Solutions, we delivered another quarter of strong growth, driven by the addition of new clients and some notable renewals that provide upside to multi-year growth.

Speaker #1: In Anti-Fraud, we delivered another quarter of strong growth, driven by good price realization, early renewals, adoption of newer innovations, including digital media forensics, and healthy growth in adjacent markets.

Speaker #1: As Lee mentioned, we are excited to announce the launch of Verisk Synergy Studio in June, with our first clients already onboarded and a pipeline for additional clients to migrate onto the platform.

Speaker #1: Our transactional revenues, which comprise 17% of our total revenues, declined 4.2% on an OCC basis. A sequential improvement from the first quarter. The declines were primarily driven by three factors.

Speaker #1: Additionally, we released our re-engineered US tropical cyclone model, which delivers comprehensive advances in how hurricane risk is quantified and applied, and is exclusively available through Verisk Synergy Studio.

Speaker #1: One, tougher comparisons from overages in the prior year, as well as lower volumes in our commercial property business that could persist in the second half of the year.

Speaker #1: Two, the carryover impacts from lower weather events in our property restoration three, lower volumes in our international travel business, primarily related to Middle Eastern travel disruption.

Speaker #1: In anti-fraud, we delivered another quarter of strong growth, driven by good price realization, early renewals, adoption of newer innovations, including digital media forensics, and healthy growth in adjacent markets.

Speaker #1: This was offset by strong ILS issuance within our catastrophe and risk solutions business, which we do not expect to benefit the third quarter. Moving to our adjusted EBITDA results, OCC adjusted EBITDA growth was 7.4% in the quarter, compounding on 9.7% growth in the prior year period.

Speaker #1: Our transactional revenues, which comprised 17% of our total revenues, declined 4.2% on an OCC basis. A sequential improvement from the first quarter. The declines were primarily driven by three factors.

Speaker #1: One, tougher comparisons from overages in the prior year, as well as lower volumes in our commercial property business that could persist in the second half of the year.

Speaker #1: Total adjusted EBITDA margins, which include both organic and inorganic results, were 57.5%. Down 10 basis points from the prior year. As a reminder, the prior year quarters reported margins benefited from a foreign currency translation impact, which contributed $120 basis points to margin then.

Speaker #1: Two, the carryover impact from lower weather events in our property restoration solution. And three, lower volumes in our international travel business, primarily related to Middle Eastern travel disruption.

Speaker #1: Excluding this non-recurring benefit, we delivered solid margin expansion driven by revenue growth, disciplined expense management, and ongoing global talent optimization initiatives. Moving down the income statement, net interest expense was $53 million in the quarter, compared to $36 million in the prior year period, due to an increased debt balance, as well as higher interest rates.

Speaker #1: Total adjusted EBITDA margins, which include both organic and inorganic results, were 57.5%, down 10 basis points from the prior year. As a reminder, the prior year quarter's reported margins benefited from a foreign currency translation impact, which contributed 120 basis points to margin then.

Speaker #1: Our current leverage level is in the middle of our targeted range, of 2 to 3 times adjusted EBITDA. Our reported effective tax rate was 24.6%, compared to 22.7% in the prior year quarter.

Speaker #1: The year-over-year increase was driven by lower tax benefits from a lower level of employee stock option exercise activity. Adjusted net income decreased 1.9% to $259 million.

Speaker #1: The year-over-year decline in adjusted net income was the result of a divestiture and higher below-the-line items, including higher interest expense and a higher tax rate.

Speaker #1: Yet we still grew diluted adjusted EPS by 5.3% to $1.98 per share. Reflecting our capital return activity, which reduced our weighted average share count by 6.8%.

Speaker #1: On a reported basis, net cash from operating activities increased 50% to $366 million. While free cash flow rose 58% to $298 million. The increase was driven primarily by growth in operating profit, as well as the timing of certain cash payments.

Speaker #1: The year-over-year increase was driven by lower tax benefits from a lower level of employee stock option exercise activity. Adjusted net income decreased 1.9% to 259 million dollars.

Speaker #1: The year-over-year decline in adjusted net income was the result of a divestiture and higher below-the-line items, including higher interest expense and a higher tax rate.

Speaker #1: We remain committed to returning capital to shareholders, and during the second quarter, we paid a cash dividend of $0.50 per share, and 11% increase from the prior year.

Speaker #1: Yet we still grew diluted adjusted EPS by 5.3% to $1.98 per share, reflecting our capital return activity, which reduced our weighted average share count by 6.8%.

Speaker #1: Additionally, we initiated a $200 million accelerated share repurchase program, which was in addition to the $1.5 billion program we entered into during the first quarter.

Speaker #1: On a reported basis, net cash from operating activities increased 50% to 366 million dollars. While free cash flow rose 58% to 298 million dollars.

Speaker #1: In total, we retired $8.5 million shares during the first half of 2026. Both programs concluded earlier this week, and we currently have approximately $800 million remaining under our share repurchase authorization.

Speaker #1: The increase was driven primarily by growth in operating profit, as well as the timing of certain cash payments. We remain committed to returning capital to shareholders, and during the second quarter, we paid a cash dividend of 50 cents per share, and 11% increase from the prior year.

Speaker #1: We are pleased to deliver continued momentum in the second quarter and are reaffirming our outlook for 2026. A complete list of all guidance measures can be found in the earnings slide deck, which has been posted to the investor section of our website veresk.com.

Speaker #1: Additionally, we initiated a 200 million dollar accelerated share repurchase program, which was in addition to the 1.5 billion dollar program we entered into during the first quarter.

Speaker #1: We continue to expect consolidated revenue in the range of $3.19 to $3.24 billion. Adjusted EBITDA is expected to be between $1.79 and $1.83 billion, with adjusted EBITDA margins of 56 to 56.5%.

Speaker #1: In total, we retired 8.5 million shares during the first half of 2026. Both programs concluded earlier this week, and we currently have approximately 800 million dollars remaining under our share repurchase authorization.

Speaker #1: We continue to expect net interest expense of $190 to $200 million, and our effective tax rate to be in the range of 23 to 26%.

Speaker #1: This results in adjusted earnings per share for the year in the range of $7.45 to $7.75. A few things to note as you update your models and think about pacing for the final two quarters of the year.

Speaker #1: We continue to expect consolidated revenue in the range of 3.19 to 3.24 billion dollars. Adjusted EBITDA is expected to be between 1.79 and 1.83 billion dollars, with adjusted EBITDA margins of 56 to 56.5%.

Speaker #1: First, we continue to expect a gradual recovery in OCC growth rate for the remaining two quarters of 2026. Second, the transactional revenues in the second quarter benefited from strong ILS activity that will not repeat in the third quarter, as this is a seasonal market.

Speaker #1: We continue to expect net interest expense of 190 to 200 million dollars, and our effective tax rate to be in the range of 23 to 26%.

Speaker #1: Third, while it is still early, the hurricane season is off to a slower start, as June and July have had limited storm activity. These factors could continue to exert pressure on transactional revenues in the second half of the year.

Speaker #1: Still, taking everything together, we remain confident in our ability to deliver results in line with our financial guidance for 2026 and in line going forward with our investor day target.

Speaker #1: And now, let me turn the call back over to Lee for some closing remarks.

Speaker #2: Thanks, Elizabeth. In summary, we are experiencing the growth rebound that we anticipated in our financial results. Additionally, the increased value in our products from AI functionality is improving price realization and the increased engagement from our clients and partners as they expertise in generating real returns on their AI investments.

Speaker #2: This has further enhanced our confidence in the operating momentum we are building in the business. We continue to appreciate all the support and interest in Veresk, given the large number of analysts we have covering us, we ask that you limit yourself to one question.

Speaker #2: With that, I'll ask the operator to open the line for questions.

Speaker #1: And now, let me turn the call back over to Lee for some closing remarks.

Speaker #3: We will now begin the question and answer session. Please limit yourself to one question. If you'd like to ask a question, please press star 1 to raise your hand.

Speaker #2: Thanks, Elizabeth. In summary, we are experiencing the growth rebound that we anticipated in our financial results. Additionally, the increased value in our products from AI functionality is improving price realization and the increased engagement from our clients and partners as they recognize the value of our data and expertise in generating real returns on their AI investments.

Speaker #3: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Tony Kaplan with Morgan Stanley.

Speaker #2: This has further enhanced our confidence in the operating momentum we are building in the business. We continue to appreciate all the support and interest in Verisk, given the large number of analysts we have covering us, we ask that you limit yourself to one question.

Speaker #3: Tony, your line is open. Please go ahead.

Speaker #1: Thanks so much. Lee, you talked about industry profitability continuing to be strong and that could lead to maybe continuation of the soft market, but on the other hand, you're helping insurers with profitability tools.

Speaker #2: With that, I'll ask the operator to open the line for questions.

Speaker #3: We will now begin the question and answer session. Please limit yourself to one question. If you'd like to ask a question, please press star 1 to raise your hand.

Speaker #1: And so I was hoping you could talk a little bit about historical periods where you've been in this part of the cycle and how growth typically plays out, just given perhaps decelerating pricing dynamics, but maybe more cross-sell.

Speaker #3: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: And so just trying to get at, should we be prepared for a few years of growth towards the lower end of your growth algorithm, or can you more than offset that through some of the new product launches and upselling and things like that?

Speaker #3: Tony, your line is open. Please go ahead.

Speaker #1: Thanks so much. Lee, you talked about industry profitability continuing to be strong and that could lead to maybe continuation of the stock market, but on the other hand, you're helping insurers with profitability tools.

Speaker #1: Thank you.

Speaker #2: Yeah. Thank you. Thanks, Tony. So I think you touched on a couple of the elements that we've talked about previously, and I want to reaffirm.

Speaker #2: First, for some historical context, our experience has been in soft markets that we've generally grown at approximately a 6.8% organic cost and currency growth rate.

Speaker #1: And so I was hoping you could talk a little bit about historical periods where you've been in this part of the cycle, and how growth typically plays out—just given perhaps decelerating pricing dynamics, but maybe more cross-sell.

Speaker #2: And in hard markets, 7.3. So both of those are well within the range that we are that we talk about, that we talked about at investor day.

Speaker #2: And I think you've also correctly identified that in these periods, the value of our data sets in assessing risk and supporting good pricing decisions become more important.

Speaker #1: Thank you.

Speaker #2: Yeah. Thank you. Thanks, Tony. So I think you touched on a couple of the elements that we've talked about previously, and I want to reaffirm.

Speaker #2: And I think that's something that we have certainly heard in our client engagement as we've been talking about where we can be most helpful.

Speaker #2: First, for some historical context, our experience has been in soft markets that we've generally grown at approximately a 6.8% organic cost and currency growth rate.

Speaker #2: And as you heard, in the in our comments on the call, the level of engagement of clients wanting to have discussions around AI, impact on pricing, pricing on other kind of market dynamics is evidence of that.

Speaker #2: And in hard markets, 7.3. So both of those are well within the range that we are that we talk about, that we talked about at investor day.

Speaker #2: But I think the most important point that I would center on is the fact that our growth is driven much more by the value that we are able to deliver to our clients and our ability to participate in that.

Speaker #2: And I think you've also correctly identified that in these periods, the value of our data sets in assessing risk and supporting good pricing decisions become more important.

Speaker #2: And I think over the past six months and certainly the past 12 months, the ability for us to utilize our data and our expertise to support our clients' value journey in using AI has been very clearly demonstrated across our businesses.

Speaker #2: And I think that's something that we have certainly heard in our client engagement as we've been talking about where we can be most helpful.

Speaker #2: And so despite the softening market, while that will have an effect, I think we're more bullish on our ability to create value for our clients and for the industry by supporting their adoption of AI in workflows, in processes, in connecting the industry.

Speaker #2: And we're beginning to see that in the pricing dynamic that we described for the premium audit AI and Exact AI. So I think that is certainly a difference that we've had relative to prior periods.

Speaker #2: And I think over the past six months, and certainly the past 12 months, the ability for us to utilize our data and our expertise to support our clients' value journey in using AI has been very clearly demonstrated across our businesses.

Speaker #2: So hopefully that gives you good context around the growth our growth perspective in this softer market.

Speaker #3: Your next question comes from the line of Andrew Steinerman with JP Morgan. Andrew, your line is open. Please go ahead.

Speaker #4: Hi, everybody. Hi. Elizabeth, I definitely call out what you just said about June and July hurricane activity. I'll also kind of mention that summertime is not typically hurricane season, but you're right.

Speaker #4: We have to kind of look with what we have now. So with that, have you assumed a low level or a typical level of hurricane activity when you consider the full 2026 revenue guide?

Speaker #2: And we're beginning to see that in the pricing dynamic that we described for the premium audit AI and exact AI. So I think that is certainly a difference that we've had relative to prior periods.

Speaker #4: I have one more point to this. And have you considered the return to an El Niño? And I've also read about a super El Niño being a near-term possible revenue driver for Veresk's climate and catastrophe risk analytics.

Speaker #2: So hopefully that gives you good context around the growth our growth perspective in the softer market.

Speaker #3: Your next question comes from the line of Andrew Steinerman with JPMorgan. Andrew, your line is open. Please go ahead.

Speaker #4: And our insurance clients asking Veresk about El Niño preparedness at this time.

Speaker #4: Hi, everybody. Hi. Elizabeth, I definitely quote what you just said about June and July hurricane activity. I'll also kind of mention that summertime is not typically hurricane season, but you're right.

Speaker #1: Thanks for the question, Andrew. Yes, our guidance as we typically do, the range still considers in the base case an average year of weather activity and of hurricane activity.

Speaker #4: We have to kind of look with what we have now. So with that, have you assumed a low level or a typical level of hurricane activity when you consider the full 2026 revenue guide?

Speaker #1: So what we're highlighting is if that plays out to be lighter as, again, and there's different views from the experts as to how it may play out this year.

Speaker #1: But playing out lighter would be a bit of a risk on the transactional side. Again, these differentials are small in the overall context of our business and even within the guidance range that we're talking about.

Speaker #1: As to the discussions on El Niño and the risks to insurers, it's something that our catastrophe and risk modeling team is engaging with clients on.

Speaker #4: And our insurance clients asking Verisk about El Niño preparedness at this time.

Speaker #1: Thanks for the question, Andrew. Yes, our guidance as we typically do, the range still considers in the base case an average year of weather activity and of hurricane activity.

Speaker #1: They're discussing the latest weather impacts. And I'll highlight the acquisition, the small acquisition that we just announced today of McKinsey Intelligence Services. As a geospatial intelligence platform and event risk management is one that can over time help to give kind of real-time insights to events as they unfold.

Speaker #1: So what we're highlighting is that plays out to be lighter as, again, and there's different views from the experts as to how it may play out this year.

Speaker #1: But playing out lighter would be a bit of a risk on the transactional side. Again, these differentials are small in the overall context of our business, and even within the guidance range that we're talking about.

Speaker #4: Thank you.

Speaker #3: Your next question comes from the line of Kelsey Zhu with Autonomous. Kelsey, your line is open. Please go ahead.

Speaker #5: Hi. Good morning. Thanks for taking my question. Lee, how are you thinking about your channel partner strategy today? I think we've talked about previously how Claude and OpenAI could be helpful as distribution channels, but are you also looking at partnering with some of these AI companies for model code development?

Speaker #1: As to the discussions on El Niño and the risks to insurers, it's something that our catastrophe and risk modeling team is engaging with clients on.

Speaker #5: And if so, are there specific areas or processes that you're interested in joining forces with them to add that intelligence layer? Thanks a lot.

Speaker #2: Thank you, Kelsey. The certainly we are engaged in discussions with all of the significant frontier model companies tangibly. You saw our announcement of the Claude connectors and MCP solution that had two applications, one to underwriting and one to claims.

Speaker #4: Thank you.

Speaker #3: Your next question comes from the line of Kelsey Zhu with Autonomous. Kelsey, your line is open. Please go ahead.

Speaker #2: That were starting points in demonstrating what our data sets could do by pairing them with natural language capabilities of the model. And the feedback from our clients have been strong in many ways.

Speaker #5: And if so, are there specific areas or processes that you're interested in joining forces with them on to add that intelligence layer? Thanks a lot.

Speaker #2: Those were test cases or proof points that we could roll out very quickly. One thing that we've heard from clients is they want us to focus on what can we deliver now that has an impact and not conceptual what's in development, but what they can use now.

Speaker #2: Thank you, Kelsey. The certainly we are engaged in discussions with all of the significant frontier model companies tangibly. You saw our announcement of the Claude Connectors and MCP solution that had two applications, one to underwriting and one to claims.

Speaker #2: And that was a demonstration of it. And coming out of that was a clear appetite for us to go deeper and broader in those types of connectors which will require some further development in a number of our product areas.

Speaker #2: Those were starting points in demonstrating what our data sets could do by pairing them with the natural language capabilities of the model. And the feedback from our clients has been strong in many ways.

Speaker #2: So specific to your question, we believe that that type of engagement and work with the model companies is going to be beneficial for our clients.

Speaker #2: Those were test cases or proof points that we could roll out very quickly. One thing that we've heard from clients is they want us to focus on what we can deliver now that has an impact, and not conceptual—what's in development—but what they can use now.

Speaker #2: It will, I think, take time for clients to test the products, understand how they apply, and develop it. But they're clearly as enthusiasm and engagement.

Speaker #2: We are doing this across the board with the model companies. One thing to your question on distribution, I think we would observe that our ability to provide distribution to the insurance industry as the last mile particularly to workflows is a very important part of the dimension.

Speaker #2: So, specific to your question, we believe that that type of engagement and work with the model companies is going to be beneficial for our clients.

Speaker #2: Our connectivity to claims professionals, underwriting professionals, risk professionals, it gives us an ability to identify where those models can be best applied, most effectively applied in order to generate real returns to our clients.

Speaker #2: It will, I think, take time for clients to test the products, understand how they apply, and develop it. But there clearly is enthusiasm and engagement.

Speaker #2: And that's clearly something that's been recognized by the model companies that we've been in discussions with. And I think that strengthens our position in helping them and helping our clients bring that model capability together with the data sets.

Speaker #2: We are doing this across the board with the model companies, one thing to your question on distribution. I think we would observe that our ability to provide distribution to the insurance industry as the last mile particularly to workflows is a very important part of the mention.

Speaker #3: Your next question comes from the line. Scott Wirtzel with Wolf Research. Scott, your line is open. Please go ahead.

Speaker #4: Hi. Good morning, guys. Thanks for taking my questions. Just wondering if you can talk a little bit more about the lower volumes on the commercial property side and why you would expect those lower volumes to persist to the second half of the year.

Speaker #4: Thanks.

Speaker #2: And that's clearly something that's been recognized by the model companies that we've been in discussions with. And I think that strengthens our point of our position in helping them and helping our clients bring that model capability together with the data sets.

Speaker #2: Thanks, Scott. I'm going to turn this over to Sarab Kempka, who runs our underwriting businesses, to give you a perspective on the commercial property, what we're experiencing, what we're hearing from clients.

Speaker #6: Yeah. Absolutely. So overall in the commercial property line in the insurance industry, what we're seeing is soft pricing. And it's a cyclical thing that happens.

Speaker #3: Your next question comes from the line of Scott Wirtzel with Wolf Research. Scott, your line is open. Please go ahead.

Speaker #6: And what the behavior that it's driving is that our clients are looking at their business, they're looking at maybe not quoting as many of the opportunities that are out there.

Speaker #6: And then when they do make the quotes, they're also looking at how much they're spending on underwriting data and analytics to analyze that business.

Speaker #4: Thanks.

Speaker #2: Thanks, Scott. I'm going to turn this over to Saurabh Kempka, who runs our underwriting businesses, to give you a perspective on the commercial property.

Speaker #6: So those impacts are being felt in our transactional part of our business. I do want to say the underlying business remains very strong. So the subscription side of our business is good and continues to be healthy.

Speaker #2: What we're experiencing, what we're hearing from clients.

Speaker #3: Your next question comes from the line of Gregory Peters with Raymond James Gregory, your line is open. Please go ahead.

Speaker #6: Yeah. Absolutely. So overall in the commercial property line in the insurance industry, what we're seeing is soft pricing. And it's a cyclical thing that happens.

Speaker #7: Good morning, everyone. So for my question, I know most, if not all of the large property casualty companies have walled off LLM general access to their data and pricing infrastructure.

Speaker #6: And what the behavior that it's driving is that our clients are looking at their business, they're looking at maybe not quoting as many of the opportunities that are out there.

Speaker #6: And then when they do make the quotes, they're also looking at how much they're spending on underwriting data and analytics to analyze that business.

Speaker #7: So I kind of a two-part question. Are you seeing any shift among your customers and attitudes towards LLM access? And then can you just step back and remind us how you're preserving your unique data assets amid the growing proliferation of AI?

Speaker #3: Your next question comes from the line of Gregory Peters with Raymond James. Gregory, your line is open. Please go ahead.

Speaker #6: Yeah.

Speaker #2: Greg, thanks for the question. So we'll certainly data security has been a critical question and issue that we have managed very carefully over decades with our clients.

Speaker #2: So it is kind of central to our DNA to make certain that we are protecting our clients' data and any application or new technology that we're developing is done with careful consideration and discussion with them about the rights to utilize that data and that technology.

Speaker #7: So I'm kind of a two-part question. Are you seeing any shift among your customers and attitudes towards LLM access? And then can you just step back and remind us how you're preserving your unique data assets amid the growing proliferation of AI?

Speaker #2: And so that has informed our governance approach to the use of data. We have had a data policy and an AI policy for many years.

Speaker #6: Yeah.

Speaker #2: Greg, thanks for the question. So we'll certainly data security has been a critical question and issue that we have managed very carefully over decades with our clients.

Speaker #2: And that serves as a great guide for us to make certain that we are protecting that data. Now, two additional points. One is that in our work with the frontier model companies, it was absolutely critical that the use of the data was controlled in the client's clud instance.

Speaker #2: And could not be used to train models. That's a protection that we think is important for our clients, certainly important in protecting our overall data access.

Speaker #2: And so that has informed our governance approach to the use of data. We have had a data policy and an AI policy for many years.

Speaker #2: So that's a demonstration of our care in managing access to those data sets and protecting them. It is front of mind in making sure on an ongoing basis that our clients' proprietary information is protected and while we are finding ways to effectively utilize that data for.

Speaker #2: And could not be used to train models. That's a protection that we think is important for our clients, certainly important in protecting our overall data access.

Speaker #2: What we feel are valuable applications that our clients are looking for. In querying that data. And so given, for instance, the success that we've had with premium audit and client uptake in the use of that AI product as well as an the businesses, I think the one thing that I would have a different point of view is if our clients are definitely interested in applying AI to the data sets to support their underwriting or claims functionality.

Speaker #2: But we're doing that in a very safe and carefully thought-out out process.

Speaker #3: Your next question comes from the line of Manav Patnik with Barkley. Manav, your line is open. Please go ahead.

Speaker #2: And so given, for instance, the success that we've had with premium audit and client uptake in the use of that AI product as well as an exact AI, just two examples across the businesses, I think the one thing that I would have a different point of view is if our clients are definitely interested in applying AI to the data sets to support their underwriting or claims functionality.

Speaker #5: Thanks. Thank you. Good morning. Lee, I just wanted to touch on the AI monetization today and you had kind of alluded to two examples or so I was hoping to elaborate on.

Speaker #5: So the MCP Connector, I think you mentioned that one of the top 10 carriers is already using it. So I was just wondering, what are the classes and minuses between is it all new or are they using this instead of something legacy?

Speaker #2: But we're doing that in a very safe and carefully thought-out process.

Speaker #5: And then kind of the second part was, I think you talked about exact AI, going 10 times. I think you said that 7K licensees.

Speaker #5: So how is that contributing to growth and how we should think of that over time?

Speaker #3: Your next question comes from the line of Manav Patnik with Barkley. Manav, your line is open. Please go ahead.

Speaker #2: Thanks, Manav. And clearly, as a topic that we're focused on and we're approaching this with a recognition that this is still evolving. We're applying new technologies.

Speaker #5: Thanks. Thank you. Good morning. Lee, I just wanted to touch on the AI monetization today and you had kind of alluded to examples I was hoping to elaborate on.

Speaker #2: We are at the core assessing how this technology is creating incremental value for our clients. How can we how are we helping them create a real return on their investment in AI?

Speaker #5: So the MCP connector, I think you mentioned that one of the top 10 carriers is already using it. So I was just wondering, what are the processes and minuses between is it all new or are they using this instead of something legacy?

Speaker #5: And then kind of the second part was, I think you talked about exact AI, going 10 times. I think you said that 7K licensees.

Speaker #2: So if we can demonstrate and I think we believe that our clients clearly see value with gone beyond the step of just testing it, but a demonstration that it improves efficiency, productivity, accuracy, and I think there will be several channels in which we are currently monetizing and expect to continue to monetize that incremental value.

Speaker #5: So how is that contributing to growth and how we should think of that over time?

Speaker #2: Thanks, Manav. And clearly, this is a topic that we're focused on, and we're approaching it with the recognition that this is still evolving. We're applying new technologies.

Speaker #2: One most immediately and while this at a scale level is not significant for us yet, but I think has clearly has the potential to support ongoing growth is simply improving the value of our pricing renewals upon subscription.

Speaker #2: We are at the core, assessing how this technology is creating incremental value for our clients. How can we—how are we helping them return on their investment in AI?

Speaker #2: We've talked a little bit about the our ability to do that in our underwriting data renewals and specifically to the premium audit product similarly in our exactware licenses we are expecting to be able to capture the incremental value that we're delivering there through these additional products on that front.

Speaker #2: So if we can demonstrate, and I think we believe that our clients clearly see value with gone beyond the step of just testing it, but a demonstration that it improves efficiency, productivity, accuracy, and I think there will be several channels in which we are currently monetizing and expect to continue to monetize that incremental value.

Speaker #2: And I think that ideally is kind of the broad-based ability for us to realize value as we have in the past, as we have with the core lines reimagined where more current data sets expanded data sets were able to capture that value in increasing subscriptions over time.

Speaker #2: We've talked a little bit about our ability to do that in our underwriting, data renewals, and specifically to the premium audit product. Similarly, in our Xactware licenses, we are expecting to be able to capture the incremental value that we're delivering there through these additional products on that front.

Speaker #2: Additional channels may include as we see appetite and early adoption of AI functionality potentially some transactional pricing on an initial basis for clients to test and experiment with new AI applications.

Speaker #2: So I think there are aspects where we could see pursuing an initial transactional model but we would want we would probably want to see that migrate into a more stable and growing subscription business over time.

Speaker #2: And I think that ideally, it's kind of the broad-based ability for us to realize value as we have in the past, as we have with the core lines reimagined, where more current data sets, expanded data sets, were able to capture that value in increasing subscriptions over time.

Speaker #2: And then thirdly, we have a number of projects that we've talked about in the past where the ability to deliver agentic AI platform or another AI solution may enable us to generate license fees for that software or for that platform that our clients will view as an appropriate way for us to monetize the investment that we've made in delivering that solution.

Speaker #2: So I think all three of those will be paths. I think we are realizing that already on the pricing front. I think as we move from piloting to greater client usage, we could see the transactional element and we are clearly exploring the licensing component on a number of the platforms that we're pursuing.

Speaker #2: So I think there are aspects where we could see pursuing an initial transactional model, but we would probably want to see that migrate into a more stable and growing subscription business over time.

Speaker #2: Overall, I mean, I think that we come out of the last six months and our experience with Anthropic and other frontier AI model companies with increased confidence that the value of our data, the value of our ability to support our clients AI journey and investment returns on that technology to be a clear upside for us over the next several years.

Speaker #2: So I think all three of those will be paths. I think we are realizing that already on the pricing front. I think as we move from piloting to greater client usage, we could see the transactional element, and we are clearly exploring the licensing component on a number of the platforms that we're pursuing.

Speaker #3: Your next question comes from the line of Faisal Ali with Deutsche Bank. Faisal, your line is open. Please go ahead.

Speaker #6: Yes. Hi. Thank you. Good morning. I was hoping for an update on the auto's business because I know you had talked about some new data sets and new solutions that were supposed to come to market at some point this year.

Speaker #6: So I just wanted to get a sense of where you are and how you're thinking about that business going forward.

Speaker #3: Thanks.

Speaker #2: Thank you, Faisal. I'm going to turn that question over to Sohrab as well.

Speaker #4: Yeah. Thank you, Faisal. I think on the auto side, we continue to make progress there. The competitive environment remains robust, but our focus on differentiated platforms like Lightspeed and new analytic objects that we're bringing out in our coverage verifier business is delivering good results for us in terms of Lightspeed being adopted by more customers and good engagement on these differentiated analytics with other customers.

Speaker #3: Your next question comes from the line of Faisal Ali with Deutsche Bank. Faisal, your line is open. Please go ahead.

Speaker #6: Yes, hi. Thank you. Good morning. I was hoping for an update on the auto business, because I know you had talked about some new data sets and new solutions that were supposed to come to market at some point this year.

Speaker #4: So we continue to focus on that strategy as we go forward.

Speaker #3: Your next question comes from the line of Henry Hayden with Rothschild & Co. Henry, your line is open. Please go ahead.

Speaker #6: So I just wanted to get a sense of where you are, and how you're thinking about that business going forward.

Speaker #7: Yeah. Hi, everyone. Thanks for having us on and for taking the questions. I had a follow-up on MCP monetization. So is this kind of volumetric?

Speaker #2: Thanks. Thank you, Faisal. I'm going to turn that question over to Sarabh as well.

Speaker #7: Is there a volumetric component to how you're charging for this or is it all covered in a subscription basis? And depending on that, how should we think about incremental margins versus variable usage costs and higher storage costs for vectorized data sets?

Speaker #7: Just to help contextualize that, how should we think about the kind of pace of adoption? You mentioned you have one carrier on this now, but as you roll through the rest of the client base.

Speaker #4: So we continue to focus on that strategy as we go forward.

Speaker #7: Thanks.

Speaker #6: Yeah. Thanks for the question, Henry. On the specifically on the MCP connections, it is included in the client's base subscription. Their quad costs or token costs are covered by them separately.

Speaker #3: Your next question comes from the line of Henry Hayden with Rothschild & Co. Henry, your line is open. Please go ahead.

Speaker #7: Yeah. Hi, everyone. Thanks for having us on and for taking the questions. I had a follow-up on MCP monetization. So is this kind of volumetric?

Speaker #6: So that is not an expense to us directly. More generally, I think we have strong governance on AI spending across our enterprise. And as for the pace of adoption and the rate of diffusion across the insurance industry, I think you've heard Leigh talk about that.

Speaker #7: Is there a volumetric component to how you’re charging for this, or is it all covered on a subscription basis? And depending on that, how should we think about incremental margins versus variable usage costs and higher storage costs for vectorized data sets?

Speaker #6: Clients are adopting. We are ready to move with them as they move into more systematic deployment. But I think given some of the discussion you've heard some of the insurance focus on governance on data security protection and other things.

Speaker #7: Thanks.

Speaker #6: Yeah, thanks for the question, Henry. Specifically on the MCP connections, it is included in the client's base subscription. Their quad costs or token costs are covered by them separately.

Speaker #6: So as the industry works through and moves through that, you will see our monetization opportunities increase gradually over time, but it will probably be a slow and steady build.

Speaker #3: Your next question comes from the line of Andrew Nicholas with William Blair. Andrew, your line is open. Please go ahead.

Speaker #8: Hi. Good morning. This is Tom Rush for Andrew Nicholas. Thanks for taking my question. I was just wondering if you could provide some color on what a kind of supports your confidence in the acceleration and second half organic growth rates.

Speaker #6: Clients are adopting. We are ready to move with them as they move into more systematic deployments. But I think given some of the discussion you've heard some of the insurance focus on governance on data security protection and other things.

Speaker #8: It sounds like transactional, at least from the storm activity, is softer through these first two months, but also I do recognize that I think last quarter it was like a historic or last third quarter was a historic low and storm activity.

Speaker #6: So as the industry works through and moves through that, you will see our monetization opportunities increase gradually over time, but it will probably be a slow and steady build.

Speaker #8: So I was just curious, what areas of the business do you think are giving you the most confidence on the acceleration and growth in that half of the year?

Speaker #3: Your next question comes from the line of Andrew Nicholas with William Blair. Andrew, your line is open. Please go ahead.

Speaker #8: Thank you.

Speaker #6: Yeah. Thanks for the question, Tom. A couple of things. So two things that give us confidence in the build. One is the subscription, the subscription growth rate.

Speaker #8: Hi. Good morning. This is Tom Rush for Andrew Nicholas. Thanks for taking my question. I was just wondering if you could provide some color on what kind of supports your confidence in the acceleration and second half organic growth rates.

Speaker #6: Again, that's 83% of our businesses where we have some visibility into that. I would add that supported we had highlighted the federal government contract and a work stoppage there.

Speaker #6: That work stoppage now has been lifted as of the beginning of the third quarter. For a one-year term. So that work has resumed. I will add that was always the assumption that we had going forward, but this is now the removal of that risk.

Speaker #8: So I was just curious, what areas of the business do you think are giving you the most confidence on the acceleration and growth in that next half of the year?

Speaker #6: So those are some of the elements of the steady acceleration. That said, I do want to highlight it may be more of a sort of steady step-up in that year-over-year organic constant currency growth rate.

Speaker #8: Thank you.

Speaker #6: Yeah. Thanks for the question, Tom. A couple of things. So two things that give us confidence in the build. One is the subscription, the subscription growth rate.

Speaker #6: Again, that's 83% of our businesses where we have some visibility into that. I would add that's supported. We had highlighted the federal government contract and a work stoppage there.

Speaker #6: We highlighted some of the headwinds on the transactional side. That strong ILS contribution that we had in the second quarter is not likely to repeat.

Speaker #6: That work stoppage has now been lifted as of the beginning of the third quarter, for a one-year term, so that work has resumed. That was—I will add—that was always the assumption that we had going forward, but this is now the removal of that risk.

Speaker #6: And so I think you've heard from us, we do have a slightly more cautious view on the transactional revenues, especially in the third quarter.

Speaker #6: With the property market and of course the weather as a TBD. So taking all that together, we may see less of the upside in the third quarter and more of an acceleration into the fourth quarter as the year plays that out.

Speaker #6: Again, with full confidence in the full-year range supported by those subscription revenues.

Speaker #3: Your next question comes from the line of Jeff Mueller with Bard. Jeff, your line is open. Please go ahead.

Speaker #6: We highlighted some of the headwinds on the transactional side. That strong ILS contribution that we had in the second quarter is not likely to repeat.

Speaker #8: Yeah. Thank you. Good morning. Thank you. Good morning. Just thinking through the financial impact and timing from the synergy studio release, is there like a platform upgrade fee that you monetize or is this all about upselling and cross-selling additional and more advanced models?

Speaker #6: And so I think you've heard from us, we do have a slightly more cautious view on the transactional revenues, especially in the third quarter.

Speaker #8: And if you can just help me nerd out for a second, you have a competitor that talks about their high-def models being a real differentiator.

Speaker #6: With the property market and, of course, the weather as a TBD, so taking all that together, we may see less of the upside in the third quarter and more of an acceleration into the fourth quarter as the year plays that out.

Speaker #8: You're calling out this like next-gen modeling framework that comes with synergy studios. So just help me understand from a model capabilities perspective, like what's different in next-gen models and how you feel that changes the competitive dynamics.

Speaker #6: Again, we have full confidence in the full-year range supported by those subscription revenues.

Speaker #3: Your next question comes from the line of Jeff Mueller with Bard. Jeff, your line is open. Please go ahead.

Speaker #8: Recognizing many clients overlap and buy models for both. Thank you.

Speaker #5: Yeah. Thanks, Jeff. I'm going to start off and then I'm going to on the differentiation and then I'll turn it over to Elizabeth to kind of talk through the kind of the pricing revenue elements to it.

Speaker #8: And if you can just help me nerd out for a second, you have a competitor that talks about their high-def models being a real differentiator.

Speaker #5: First, I think what's important is that first, the models are kind of the starting point and they're what we are releasing or what we feel are the most sophisticated scientific leading catastrophe models with a much more physics reality-oriented solution for our clients.

Speaker #8: Recognizing many clients overlap and buy models from both. Thank you.

Speaker #5: And so with the US tropical cyclone model, we think that that is cutting-edge science and a leading model. Synergy Studio as a platform enables our ability one to increase the capacity of our clients to run larger simulations over longer periods which adds value to them.

Speaker #5: And do that more quickly. So the capability of that platform is a significant enhancement. And secondly, our ability to update those models is much easier for our clients than a traditional on-premises solution.

Speaker #5: Finally, the I think a key competitive differentiation is a consistent economic framework so that all of our models can be utilized to assess risks on a consistent basis across that entire portfolio.

Speaker #5: And so with the US tropical cyclone model, we think that that is cutting-edge science and a leading model. Synergy Studio as a platform enables our ability one to increase the capacity of our clients simulations over longer periods, which adds value to them.

Speaker #5: And I think that's a distinctive differentiation for our clients that want to understand risk on a global and a portfolio basis. So those are the elements I think go to your question from a competitive standpoint in terms of why we think these are great products and why synergy studio as a new product will be delivering more value to our clients.

Speaker #5: And do that more quickly. So, the capability of that platform is a significant enhancement. And secondly, our ability to update those models is much easier for our clients than a traditional on-premises solution.

Speaker #6: Yeah. And I'll add it on the pricing. Well, so first I'll comment. All of our models are on that next generation financial framework and we talked about it a while ago on earnings when we kind of launched that and put all of our models on that next generation financial framework.

Speaker #5: Finally, the I think a key competitive differentiation is a consistent economic framework so that all of our models are can be utilized to assess risks on a consistent basis across that entire portfolio.

Speaker #6: And so that'll be available on various synergy studio. There is not as to the pricing, Jeff, there is not a specific platform upgrade fee that we're monetizing with that.

Speaker #5: And I think that's a distinctive differentiation for our clients that want to understand risk on a global and a portfolio basis. So those are the elements I think go to your question from a competitive standpoint, in terms of why we think these are great products and why Synergy Studio, as a new product, will be delivering more value to our clients.

Speaker #6: We do think the overall platform itself derives greater value. And the other piece I will add to it is that some customers may choose to have that operated on a hosting basis.

Speaker #6: And so some of our customers have migrated to a hosted model and some even before even on their touchstone platform have added a hosting component which has added to our revenue.

Speaker #6: Yeah. And I'll add in on the pricing. Well, so first I'll comment. All of our models are on that next generation financial framework and we talked about it a while ago on earnings when we kind of launched that and put all of our models on that next generation financial framework.

Speaker #6: So taken all together, that is all contemplated in the investor day guidance for that catastrophe and risk business at eight and a half to nine percent on a long-term basis.

Speaker #6: And so that'll be available on various synergy studio. There is not as to the pricing, Jeff, there is not a specific platform upgrade fee that we're monetizing with that.

Speaker #3: Your next question comes from the line of Curtis Nagel with Bank of America. Curtis, your line is open. Please go ahead.

Speaker #6: We do think the overall platform itself derives greater value. The other piece I will add to that is some customers may choose to have that operated on a hosting basis.

Speaker #8: Great. Just maybe could you comment on the growth in catastrophe and risk in the quarter? I think it was up double digit in one Q.

Speaker #6: And so some of our customers have migrated to a hosted model and some even before even on their touchstone platform have added a hosting component, which has added to our revenue.

Speaker #8: What does it look like in the second quarter? And just out of being about general expectations in the back half of the year, particularly with the we've talked about the launch of the synergy studio.

Speaker #6: So taking all together, that is all contemplated in the investor day guidance for that catastrophe and risk business at eight and a half to 9% on a long-term basis.

Speaker #6: Yeah. Thanks, Kirk. We don't give specific disclosure on that business on an ongoing basis. It has been a strong contributor and of course the second quarter gets has the securitization market as a benefit on the transactional side.

Speaker #3: Your next question comes from the line of Curtis Nagel with Bank of America. Curtis, your line is open. Please go ahead.

Speaker #6: But they're seeing steady uptick and performance that is in line with their long-term guidance.

Speaker #8: Great. Just maybe, could you comment on the growth in catastrophe and risk in the quarter? I think it was up double digits in one quarter.

Speaker #3: Your next question comes from the line of Jason Haas with Wells Fargo. Jason, your line is open. Please go ahead.

Speaker #8: What does it look like in the second quarter? And just kind of think about general expectations in the back half of the year, particularly with what we talked about—the launch of the Synergy Studio.

Speaker #7: Hey, good morning and thanks for taking my question. I wanted to ask maybe a high-level strategic one. It sounded like from the prepared remarks, you mentioned an agentic underwriting platform that you're working on and some of the comments around exact AI just sounded a bit more like sort of like I guess like a workflow tool.

Speaker #6: Yeah. Thanks, Kurt. We don't give specific disclosure on that business on an ongoing basis. It has been a strong contributor, and of course, the second quarter has the securitization market as a benefit on the transactional side.

Speaker #7: So I'm curious if there's an opportunity here to use AI to maybe push a little bit more into workflow software. I know historically you've really been more of a data company.

Speaker #7: I know you have obviously some software solutions, but curious how you're thinking about that from a high-level perspective in terms of where you want to take the business.

Speaker #6: But they're seeing steady uptick and performance that is in line with their long-term guidance.

Speaker #7: Thank you.

Speaker #5: Thanks, Jason. So there clearly are elements for us to integrate our data and our insights into workflows. I think the predominant path will be in integrating those data sets into our clients either AI solutions or their existing workflows.

Speaker #3: Your next question comes from the line of Jason Haas with Wells Fargo. Jason, your line is open. Please go ahead.

Speaker #4: Hey, good morning and thanks for taking my question. I wanted to ask maybe a high-level strategic one. It sounded like from the prepared remarks, you mentioned an agentic underwriting platform that you're working on and some of the comments around Exact AI just sounded a bit more like sort of like I guess like a workflow tool.

Speaker #4: So I'm curious if there's an opportunity here to use AI to maybe push a little bit more into workflow software. I know historically you've really been more of a data company.

Speaker #5: But we have had, as you've noted, clients who have asked us to work on developing a platform which may be which would be a software platform or an AI platform that integrates their workflows more effectively.

Speaker #4: I know you have obviously some software solutions, but curious how you're thinking about that from a high-level perspective in terms of where you want to take the business.

Speaker #4: Thank you.

Speaker #5: And we're excited about that because we clearly have the expertise, the data sets, are familiar with the workflow in order for us to be able to do that.

Speaker #5: And as you also referenced, exact AI is something that is built. Into our exact where platform that services the needs of a wide range of claims companies and professionals.

Speaker #5: But we have had, as you've noted, clients who have asked us to work on developing a platform, which may be which would be a software platform or an AI platform that integrates their workflows more effectively.

Speaker #5: So yes, there is a software opportunity for us to deliver on the our clients' needs for data integration, automation, and modernization of their processes also connecting participants within those workflows outside of the individual client spaces.

Speaker #5: And we're excited about that because we clearly have the expertise, the data sets, are familiar with the workflow in order for us to be able to do that.

Speaker #5: So that level of connectivity and integration of data we can deliver in a variety of ways. In partnership with our clients' preferred platforms, particularly among our larger clients, in partnership with AI solutions that may be developed by the frontier model companies as we've done with the Anthropic MCPs or in specialized platforms that we have developed for clients that want us to deliver that capability.

Speaker #5: And as you also referenced, Exact AI is something that is built into our Exactware platform that services the needs of a wide range of claims companies and professionals.

Speaker #5: At the end of the day, what we're focused on is leveraging our data sets and our expertise to create more value for the clients and we have a variety of means to do that.

Speaker #3: Your next question comes from the line of Ashish Sabladra with RBC Capital Markets. Ashish, your line is open. Please go ahead.

Speaker #5: So that level of connectivity and integration of data we can deliver in a variety of ways, in partnership with our clients' preferred platforms, particularly among our larger clients, in partnership with AI solutions that may be developed by the frontier model companies as we've done with the Anthropic MCPs or in specialized platforms that we have developed for clients that want us to deliver that capability.

Speaker #7: Thanks for taking my question. I had a question on AI as well. So thanks for sharing the client engagement and the monetization for AI.

Speaker #7: Previously, it was noted that sales cycle. Elongated due to AI. I was just wondering if you have seen any shift in that trend recently.

Speaker #7: And then another question on the same topic would be a question that we get is as insurance companies are launching industry-specific LLMs, is there a risk that they could move some of these processes in-house?

Speaker #5: At the end of the day, what we're focused on is leveraging our data sets and our expertise to create more value for the clients, and we have a variety of means to do that.

Speaker #7: So as we think about the percentage, how do we think about AI as being a net positive or is there some headwinds from moving some of the processes in-house?

Speaker #3: Your next question comes from the line of Ashish Sabladra with RBC Capital Markets. Ashish, your line is open. Please go ahead.

Speaker #7: Thanks.

Speaker #5: Yeah. Thanks, Ashish. I'm going to take their second part of the question first. And yes, we do have there are clients that are developing their own LLMs.

Speaker #4: Thanks for taking my question. I had a question on AI as well. So thanks for sharing the client engagement and the monetization for AI.

Speaker #5: And I think the opportunity with them for us remains as strong, if. Stronger because the utilization of the unique data sets that we have the standardized and cleansed data are just as relevant to them in this context as it would be for frontier model company.

Speaker #4: Previously, it was noted that sales cycles had elongated due to AI. I was just wondering if you have seen any shift in that trend recently.

Speaker #4: And then another question on the same topic would be a question that we get is as insurance companies are launching industry-specific LLMs, is there a risk that they could move some of these processes in-house?

Speaker #5: And those have been discussions that we think are that we have had and have supported our clients with. I would also use that as an opportunity to say the context or the semantic layer of what we have delivered and our retrieval augmentation generation technology is important.

Speaker #4: So as we think about the puts and takes, how do we think about AI as being a net positive or is there some headwinds from moving some of the processes in-house?

Speaker #4: Thanks.

Speaker #5: Yeah. Thanks, Ashish. I'm going to take their second part of the question first. And yes, we do have there are clients that are developing their own LLMs.

Speaker #5: Our ability to access all of that data and deliver what's really relevant to them is just as important in that context. So I think we to us, that's a very positive.

Speaker #5: And I think the opportunity with them for us remains as strong, if not stronger, because the utilization of the unique data sets that we have the standardized and cleansed data are just as relevant to them in this context as it would be for frontier model company.

Speaker #5: Development. Our general experience is the more sophisticated our clients are from a technology and data standpoint, the more data that they consume, the broader relationship that we have.

Speaker #5: And on your first question, I may not have heard it, but I think Elizabeth did.

Speaker #6: Yeah. Moving to the sales cycles and the elongation that we referred to in the first quarter, I think that pattern and that environment does remain consistent.

Speaker #6: As you heard us discuss earlier on the call, there is a tremendous amount of client focus on questions of data usage rights, data protection.

Speaker #5: Our ability to access all of that data and deliver what's really relevant to them is just as important in that context. So I think, to us, that's a very positive development.

Speaker #6: There's also our own focus on ensuring that our IP and our valuable data is well protected. So those discussions, both sides are working through the legal terms ensuring that confidence.

Speaker #5: Our general experience is that the more sophisticated our clients are from a technology and data standpoint, the more data they consume, and the broader relationship we have.

Speaker #6: In the. Run we view that as a competitive differentiator for us because we have a long history of trust with the insurance industry and the robust governance processes and robust legal team to.

Speaker #5: And on your first question, I may not have heard it, but I think Elizabeth did.

Speaker #6: Yeah. Moving to the sales cycles and the elongation that we referred to in the first quarter, I think that pattern and that environment does remain consistent.

Speaker #6: And give confidence to the clients in the protections that we have there.

Speaker #3: Your next question comes from the line of Jeff Silver with BMO. Jeff, your line is open. Please go ahead.

Speaker #6: As you heard us discuss earlier on the call, there is a tremendous amount of client focus on questions of data usage rights and data protection.

Speaker #8: Hey, good morning. Thanks so much. This is Ryan Nunford, Jeff. I was just hoping you could help us on the EBITDA margins for the quarter.

Speaker #8: I know there was a tough comp with the FX for the year-over-year, but was wondering if you could walk through any other drivers that drove the margins.

Speaker #8: And then just looking forward, are you still anticipating that expenses ramp for the second half of the year? Thank you.

Speaker #6: In the long run, we view that as a competitive differentiator for us, because we have a long history of trust with the insurance industry, as well as robust governance processes and a strong legal team to ensure and give confidence to our clients regarding the protections we have in place.

Speaker #6: Yeah, thanks. Thanks, Ryan. Thanks a bunch for the question. Yes, it was. A strong margin quarter for us. As we highlighted that year-over-year comp, the Q2 of '25 included 120 basis point impact of FX that impact is small to minimal in this current quarter.

Speaker #3: Your next question comes from the line of Jeff Silver with BMO. Jeff, your line is open. Please go ahead.

Speaker #6: So that margin expansion is real, so to speak. On a trailing 12-month basis, we're at 56.3%, which is in the midpoint of the guidance.

Speaker #7: Hey, good morning. Thanks so much. This is Ryan on for Jeff. I was just hoping you could help us on the EBITDA margins for the quarter.

Speaker #7: I know there was a tough comp with the FX for the year-over-year, but I was wondering if you could walk through any other drivers that affected the margins.

Speaker #6: Factors for the strong margins this quarter are a couple. Number one, there's you've seen historically, there's seasonality in our margins with Q2 often being the strong.

Speaker #7: And then just looking forward, are you still anticipating that expense is ramped for the second half of the year? Thank you.

Speaker #6: This quarter, because in part because that ILS transactional revenue comes in at a high incremental margin. And our expenses tend to build steadily over the course of the year.

Speaker #6: Yeah, thanks. Thanks, Ryan. Thanks a bunch for the question. Yes, it was a strong margin quarter for us. As we highlighted that year-over-year comp, the Q2 of '25 included 120 basis point impact of FX that impact is small to minimal in this current quarter.

Speaker #6: I think I would also just I want to highlight we did beyond that, we have had strong expense discipline over the course of the year.

Speaker #6: So that margin expansion is real, so to speak. On a trailing 12-month basis, we're at 56.3%, which is at the midpoint of the guidance.

Speaker #6: And I want to highlight. Margin expansion in every single one of the past quarters. Even despite the more modest transactional revenue impact. So I think we've had consistently strong expense discipline over that time.

Speaker #6: Factors for the strong margins this quarter are a couple. Number one, as you've seen historically, there's seasonality in our margins, with Q2 often being the strongest quarter.

Speaker #6: As we build into the balance of the year, though, both the seasonality on the second half margins will have an impact. And then we will have we will have both general timing of expenses as well as perhaps an opportunity to invest further.

Speaker #6: Because in part because that ILS transactional revenue comes in at a high incremental margin. And our expenses tend to build steadily over the course of the year.

Speaker #6: Time these innovative products as our revenue growth continues to accelerate from here.

Speaker #6: I think I would also just I want to highlight we did beyond that, we have had strong expense discipline over the course of the year.

Speaker #3: Your final question comes from the line of George Tong with Goldman Sachs. George, your line is open. Please go ahead.

Speaker #6: And I want to highlight that we delivered margin expansion in every single one of the past quarters, even despite the more modest transactional revenue impact.

Speaker #8: Hi, thanks. Good morning. You highlighted AI as a driver of stronger renewals and improved price realization. Can you help quantify the contribution that AI to organic growth today?

Speaker #6: So I think we've had consistently strong expense discipline over that time. As we build into the balance of the year, though, both the seasonality in the second half and then we will have both general timing of expenses as well as perhaps an opportunity to invest further behind these innovative products as our revenue growth continues to accelerate from here.

Speaker #8: Is the benefit measured in tens of basis points or has it already become large enough to contribute more meaningfully to organic growth?

Speaker #5: Yeah, thanks, George. It's hard. Still at an early stage. So I don't think that we are able to quantify certainly its current impact. I do think that based upon what we see, we clearly think it could it should lift our organic growth rate to some degree.

Speaker #3: Your final question comes from the line of George Tong with Goldman Sachs. George, your line is open. Please go ahead.

Speaker #5: It's difficult to parse out across overall renewal and value that we're providing in other areas. But I certainly feel more confident that this is additive to our overall growth rate certainly on a growth basis and on a net basis we see just increasing in client engagement and a recognition of the tangible value that they're getting by integrating our data sets with AI models.

Speaker #7: Hi, thanks. Good morning. You highlighted AI as a driver of stronger renewals and improved price realization. Can you help quantify the contribution that AI is making to organic growth today?

Speaker #7: Is the benefit measured in tens of basis points, or has it already become large enough to contribute more meaningfully to organic growth?

Speaker #5: Yeah, thanks, George. Look, it's hard. We're still at an early stage. So I don't think that we are able to quantify, certainly its current impact.

Speaker #5: I do think that, based upon what we see, we clearly think it could—and it should—lift our organic growth rate to some degree. It's difficult to parse out across overall renewal and the value that we're providing in other areas.

Speaker #5: But I certainly feel more confident that this is additive to our overall growth rate. Certainly, on a gross basis and on a net basis, we see an increase in client engagement and a recognition of the tangible value that they're getting by integrating our data sets with AI models.

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