Good day, and welcome to the Verisk Second Quarter 2021 Earnings Results Conference Call. This call is being recorded. [Operator Instructions]. For opening remarks and introductions, I would like to turn the call over to Verisk's Head of Investors Relations, Ms. Stacey Brodbar. Ms. Brodbar, please go ahead.

Thank you, Jay, and good day, everyone. We appreciate you joining us today for a discussion of our second quarter 2021 financial results. Today's call will be led by Scott Stephenson, Verisk's Chairman, President and Chief Executive Officer, who will provide an overview of our business. Lee Shavel, Chief Financial Officer and Group President, will follow with the financial review. Mark Anquillare, Chief Operating Officer and Group President, will join the team for the Q&A session. The earnings release referenced on this call as well as the associated 10-Q can be found in the Investors section of our website, verisk.com. 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. Finally, 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 their future performance, including, but not limited to, the potential impacts of the COVID-19 pandemic. 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 filings. Now I will turn the call over to Scott.

Thanks, Stacey, and good day, everyone. Thanks for joining us for our second quarter 2021 earnings conference call. I'm pleased to share that Verisk delivered a strong second quarter result. The strength of our business model has been on full display since the start of the pandemic and continues in the recovery. We delivered solid top line and profit growth in every quarter last year despite the weak economic environment and operating challenges from lockdowns because of the consistent and durable growth in our subscription-based businesses. As expected, we are now fully participating in the recovery as our transactional businesses are showing strong resilience and rebounding with the rollout of vaccines and global economies opening up. To be more specific in the second quarter, Verisk delivered organic constant currency revenue growth of 6.3%, comprised of growth of 5.5% and are mostly subscription-based non-COVID-sensitive revenues, and growth of 12.1% in our mostly transactional COVID-sensitive revenues. In fact, certain of our transactional businesses have already returned to pre-COVID levels. We have confidence this general trend can continue and believe that as the COVID impacts fully abate, we can return to delivering financial results in line with our long-term model. Lee will provide more details in his financial review. These results were delivered through the hard work, dedication and consistent focus on our customers by our 9,000 employees around the globe. In many parts of the world, we've already begun welcoming our employees back to our offices, with a plan guided by our mission of protecting the health and well-being of our team members and in line with directives from local governments and public health officials. While our Global Protection Services team is keeping a close eye on developments with the delta variant, our teams are energized to work together in person again.…

Thank you, Scott. First, I would like to bring to everyone's attention that we have posted a quarterly earnings presentation that is available on our website. Moving to the financial results for the quarter. On a consolidated and GAAP basis, revenue grew 10.1% to $748 million. Net income attributable to Verisk decreased 14% to $154 million, while diluted GAAP earnings per share attributable to Verisk declined 13% to $0.94 per share. These declines are the result of a noncash revaluation charge related to the U.K. tax law change. Adjusting for the impact of the $0.21 per share noncash revaluation charge, diluted adjusted EPS increased 7% to $1.38. Moving to our organic constant currency results. Adjusted for nonoperating items, as defined in the non-GAAP financial measures section of our press release, we were very pleased with our operating results, led by consistent growth in our subscription revenues and recovery in our transactional revenues as our business rebounds from the COVID-related declines from last year. In the second quarter, organic constant currency revenue grew 6.3%, led by continued strength in our Insurance segment and sequential improvement in our Energy and Financial Services segment. Our non-COVID-sensitive revenues, as we defined at the beginning of the pandemic, increased 5.5% in the second quarter of 2021 as compared to the growth of 6.5% in the prior year quarter. This stable growth in our non-COVID-sensitive revenues, representing approximately 85% of our total revenues, reflects the durability and resilience of our primarily subscription model. Our COVID-sensitive revenues, which represent 15% of our consolidated revenues, continued on a sequential improvement trend and returned to growth this quarter, increasing 12.1%. This compares to declines of 20% in the second quarter last year and the prior quarter performance of declines of 5.9%. Growth was primarily the result of improvements in…

[Operator Instructions]. Our first question comes from the line of Greg Peters of Raymond James.

I'm going to let the other analysts focus on the financials. I'd like to pivot to the Insurance business beyond specifically, for the property casualty industry, we're seeing 2 variables, first of all, the -- come out of the lockdown. And then secondly, favorable pricing. And your organic was quite strong in insurance. The insurance industry is forecasting a moderation of growth for them for the balance of the year and into next year. Can you give us an expectation of how those variables are affecting your business?

Yes. Scott here. Thanks for the question. Two things. One is, if you were to look at the pricing algorithms that apply into solutions that we provide to the insurance industry, the way that we price our solutions is related to the value of the solutions that we're getting to our customers. So it's not the case that in our -- to the pricing algorithm is a term, which is significant, and that relates to the amount of premium that our customers are putting through their own books of business. Our solutions are priced according to the amount of profitability and growth that they generate for our customers. And every CEO that I speak to in the insurance industry, every one of them to a person considers their business -- to grow the business. And so they are leaning into new methods as a way of trying to grow their businesses. And we expect that to persist. And it's always been the case actually that in our Insurance business, we have grown considerably faster than the underlying product marketplace. And actually, that's true to the energy vertical as well. And why? Because our customers are trying to make increasing use of data analytics solutions. So we're not really yoked to the net written premium volumes in the insurance industry.

Got it. My follow-up question, again sticking with operations, and you talked about your claim analytics and products and the suite of products you're offering there. Insurance industry is really beginning to struggle with inflation costs, repair costs on cars. Rental car rates have gone through the roof. And I'm just curious, from an operational perspective, the products -- your service providing to the industry, how are they adapting rapidly to these changing conditions in the marketplace to help the insurance industry?

Yes, that is something that our customers care about a great deal. And so it's really incumbent upon us to make sure that the cost factors associated with the kinds of solutions we've got, which are aimed at understanding what it takes to repair something, we need to make sure that the underlying cost factors are current. And that is something that we give a lot of attention to. That has always been a part of the way that we approach this. But it's particularly important in a moment like this where demand, demand surge and, therefore, the price of the underlying commodities moves around. You have highlighted something that our customers care quite a bit about. Actually, I'm going to turn to Mark here, who leads our insurance vertical. Not long ago, we were on a call with the CEO of one of the largest insurance companies in North America and this was one of the topics they highlighted. And we had a lot of conversation about what we're doing and the way that our solutions do keep up. So I'm really just affirming that the topic that you've highlighted there is on the minds of our customers. Mark, anything you want to add to that?

No, I think our customers expect us to be on top of that. So as an example, it's -- the repair cost estimate solutions, we're making constant updates on a weekly basis. We're providing them what's the cost of lumber, as an example, which has been a very significant inflationary item. And their repair cost estimates are reflected that -- are reflecting that increase. We are very much into the world of social inflation, right? The cost of litigation and the cost of claims is up as a result of that. So that -- those trends are reflected in our loss costs. That's the pricing they do. It's reflected in the repair cost estimates. It's reflected in how they underwrite a property or any insurance risk, and I'd like to think that we are at the lead in thinking for them on that topic.

Next question comes from the line of Gary Bisbee of Bank of America.

Scott, thanks for the updates on innovation and technology. And I wanted to ask a little bit about that. You talked about how the tech modernization progress you're making is accelerating the ability to innovate and reducing CapEx, which you're trading that off for higher capital spending on innovation and new products. I guess a 2-parter. As we think about innovation broadly across the company, do you keep internally -- or can you help us think about like the concept of a vitality index? How much more is all of this change you're doing contributing to growth from innovation? And then secondly, do you see that benefit more as something that should allow you continue to deliver to the long-term 7% revenue growth target that you have? Or is there potential as that innovation accelerates that you could begin to outperform that target more meaningfully as innovation and new products become a larger part of your revenue?

Thanks, Gary. Well, maybe to your second question first. We do feel very good about the shape of our business, where we sit in the flow of what is happening in the business world. One of the most important things happening in the economy is businesses becoming the better, more analytic digital version of themselves. And that is fundamentally what is in and around and underneath our business and that we enjoy these tremendous relationships with our customers founded upon trust and some really, really valuable and distinctive solutions. That's our business. And the environment in which we're doing our work, obviously, the pandemic has had an effect as it did on everybody. But over longer periods of time, there are these very constructive trends. And so that's kind of fundamentally our growth story. Against that, our customers look to us to be their fill in the blank tech partner. There are -- in every one of the verticals we serve, there's a fill in the blank tech, InsurTech, fintech, energy tech. There's a list of players like that as long as both of your arms. Our customers expect us to be providing innovation. That is one of the reasons why they lean into the relationship with us in the first place. So I think the nature of your question, Gary, was like this investment into that solution and what is the effect of that in terms of our growth. We pay attention to that. It would probably surprise you to know the relatively modest size of investment opportunities that all the way to the office of the CEO we're looking at because it's the lifeblood of our business. And so we do -- we are resolving things down to the level of the individual solution, and we pay attention…

Yes, just maybe to provide a good example of everything Scott described. I think one of the big success stories is really inside of what is our underwriting and rating ISO business. We continue to have a very big business focused on what we refer as loss cost rules and forms. And we have been growing kind of an inflationary way because we've been very thoughtful with our customers. The growth that we've seen, that has increased over the last several years is because of that innovation investment and kind of bundling things for these InsurTechs and others. So I just wanted to reaffirm and maybe provide tangible evidence to that.

And then just a quick follow-up for Lee. Margins, you did a nice job keeping the majority of the pandemic benefit from the prior year in this year's quarter. What caused, I guess, travel's one probably that hasn't come back. But what other cause may not have fully normalized and sort of -- is this a good rule of thumb going forward? Or would you expect that more of the costs that came out last year likely will come back in, in the next quarter?

Yes. Thank you, Gary. I try to look at the cost structure and evaluate what's temporal and what's structural. And there is some temporal element of this that we've been able to hold on to. But I think to your point on the travel and entertainment side, I think there are structural savings that we are -- we'll be able to take advantage of over time. And so I think some of that, there is a structural change. I also think over the longer term, as we adopt or adapt to the flexible work structure that Scott described in his comments that it will provide opportunities for us from a productivity, from a real estate cost standpoint to reduce some of those expenses over time. But of course, that follows kind of the lease renewal process. But those will be things that we're able to achieve over time as well. And then finally, the other element is compensation, and that is more directly tied to our overall performance against the growth targets and overall head count growth. And I think that will -- that's the element that is likely and we'll certainly hope is going to normalize consistent with the achievement of our revenue growth and our EBITDA growth.

Next question comes from the line of Hamzah Mazari of Jefferies.

I just wanted to go back to the question on your long-term sort of 7%-plus organic growth sort of aspiration. It was very consistent prior to 2015. And I realize, post-2015, you had mix issues, cyclicality, the business mix changed in the portfolio. But going forward, is it just the world reopens and you can get back to 7%-plus? Or you need to see some of these benefits from the big investment spend that's been going on? And that really lags. Just give us a sense of -- is it just the macro? Or is it execution or any other thing we should be paying attention to, to get back to 7%-plus consistently?

Well, as I said before, the nature of our business is that because we're providing a unique kind of value to our customers, very consistently, our experience has been that we grow at a rate greater than the rate of growth in the verticals that we're serving. And I don't see any change in that. When you describe it that way, kind of stable normal environments are, all else equal, supportive. And you would have to expect over long periods of time, if you look at the marketplaces that we serve, they're very important elements of the economy. So a thesis, which is -- they will remain important is a pretty sound one. And then actually, the demography of the customer set inside of these verticals, they don't really change all that rapidly. Of course, we're always paying attention to that, but they don't tend to -- so you've got that as the background. But there is no question that there is a huge dependence upon execution. The whole innovation agenda has to be done well. We have to dig in with our customers as development partners to make sure that we hit what's needed, that we get it to market faster. All of those things have a lot to do with returns on any given innovation investment that we've made. So that's very important. And another thing, which -- I don't know, I suppose if you watch us really carefully over a long period of time, this would be evident, but I just want to highlight that there is a great deal of dynamic inside of what we're doing in terms of looking at the solution families and the solution sets that we've got and deciding where are they and where are they headed. And we have a very long track record. I'll just -- I'll pick the insurance vertical since it's the largest one for us. Investing more inside of things that are showing a lot of promise, but retiring in some cases, selling off solution sets that we have as well. And so it can all look -- it's kind of like the duck on top of the lake. It looks very steady, but underneath, there's various paddling going on. And we get down to the level of individual solutions. Again, just using insurance as an example, through the years, we've retired a number of things that we were doing. We invented a whole lot of things. All of that is inside of getting to this long-term view of growth potential.

If I can just kind of supplement on that to provide some validation, I think you referenced a couple of elements here. But if you look at the underlying insurance business, it gets consistently delivered on that 7% organic growth area, where there have been negative impacts from that is it has either been because of some of the nearer-term cyclical elements associated with the energy business. But that business, as we have seen and demonstrated, particularly with the Lens platform, the investment in the energy transition practice, has demonstrated their potential to move to similar levels of growth. And Financial Services has been undergoing a transition to a more focus on sustainable growth, reducing some of that volatility. So I want to make certain that you appreciate that underneath the space is a consistent track record of delivering on that potential, with some of the other elements as we move down this path of investing in the platform in order to -- for us to deliver the value of those rapidly growing data sets, improved platforms against the business. That's been the recipe that is delivered and supports our conviction of the achievability of that going forward.

That's extremely helpful, really appreciate that. And then just my follow-up question is around capital allocation. Your leverage is arguably going to get very low next year. Your CapEx at some point is going to go down and so free cash flow should inflect a lot. Should we be thinking about buybacks being a much bigger piece of return on sort of your cash deployment? Or should we be thinking outsized growth in the dividend? You haven't done much large-scale M&A. So I'm assuming you can do M&A and return cash. Just any thoughts as to when you see that big free cash flow inflection at some point, what do you do with the cash?

So Hamzah, thanks for the question, and we appreciate you identifying the strength in the cash flow. I think the important thing to emphasize here is that we believe that one of the strongest elements that we have, the strongest opportunities that we have to create value is investing internally within the business, as Scott has described, in the technology, in the data sets, in new services for our clients. And so we want to make certain that we are taking every advantage to where we think we can generate incremental growth, where we can generate high incremental returns on capital from that. So we start from the position of how much capital do we have available that we're generating from the business. What are our opportunities first to invest in the business, in a way that takes advantage of those opportunities to generate growth and returns? Secondly, are there opportunities that we see in the M&A market to invest in businesses that we can create value by meaningfully improving their revenue growth through our distribution, utilizing their data sets more effectively or improving their technology? And FAST, as we've described, this has been a great example of that. Genscape in our energy business has been additive, has generated attractive returns on capital for us. So that's the second use. And then the decision on share repurchases is really an outcome of what capital do we have that we don't have an opportunity, we don't see an opportunity to invest, to contribute to growth or returns on capital. So it is an outcome of our capital allocation process, not something that we target at the outset. So kind of taking your question, if we don't see those opportunities, if the M&A market doesn't present opportunities for us given where valuations are or the nature of the business to create value, then we would expect that excess capital to be returned either through the dividend or through increased share repurchases, but it will all be driven by that investment opportunity and our discipline.

[Operator Instructions]. Next question comes from the line of Andrew Jeffrey of Truist Securities.

Mark, maybe a question for you on LightSpeed. It sounds like it's one of the more exciting revenue growth drivers within your insurance businesses, especially as you expand beyond auto. Can you maybe dimensionalize for us the kind of pricing power you might have in that business and how important that is to the durability of that 7% segment organic revenue growth target?

Yes. So let me try to maybe provide some parameters. The way we're going about this is we really believe that insurer, in their search for the best experience to the customer, the digital engagement, they want information that's actionable and they can kind of have a bindable quote, meaning when you go online and you want to get a price, you don't want it to change. And basically, 33% to 40% of the cases, that price changes, if you say I'm interested. And they do all this underwriting and pull the information. we're bringing all that information forward and the combination of data we have and analytics so that the insurer has confidence to quote. And that's a big change. So that is noteworthy and important. And what we've tried to do in kind of thinking about the opportunity here, we know who's providing that information. And we feel it's about $1 billion that's going to be type of market opportunity in the insurance space. So we simply have a lot of runway, especially on the personal line side. We have a strong base on the commercial line side at the so that's kind of an extension, which hopefully provides you with a little bit of context of why we think it's important and also why we've continued to emphasize that .

Yes, that's really helpful. I think being able to quantify some of these TAMs will really help investors gain confidence in the long-term growth targets. And then a quick follow-up on cat modeling. It seemed like that was a decent tailwind this quarter. Is that something we need to think about in terms of volatility? How much of an impact does that have on your business from an issuance perspective on a quarterly basis?

So the majority of our catastrophe modeling is around a touchdown subscription model that we've taken a lot of customers and we've had a lot of wins. So the growth you've seen, the underlying foundational growth, is us winning customers and bringing them on to the platform. Where you're seeing a little bit of a spike and valley is inside of what is the ILS market. Those are the cat bonds we referred to. And that is a little bit a function of timing of the market. We had a good couple -- we had a good quarter. We probably would expect a strong for end of year. It's a little bit tough to tell whether that's going to grow in 2022. At the same time, I would say to you that the market in general is getting more and more collateralized those type of risks. So if you were to ask me what the growth perspective is for cat bonds over the next 5 years, I would say it's going to be up. It's going to be bigger, and we're well-positioned for it, whether it's going to be up or down in one particular quarter, that is a tough estimate for you. And I hope you can appreciate the difficulty we have in forecasting quarter-by-quarter, but I think we have feel for year-over-year.

Next question comes from the line of Kevin McVeigh of Credit Suisse.

I wonder if you could just give us a little bit more context on the Duck Creek announcement earlier this quarter where they talked about the enhanced integration within your insured workflows and what that can mean to the business longer term in terms of similar template. Should we expect similar opportunities?

Let me continue. Thank you for the question, another good opportunity. I think I've highlighted in past sessions here, one of the things we're seeing more and more frequently is our customers are looking forward to this interconnected ecosystem. They want the ability to use their internal solutions, their solutions or other third-party solutions in a connected way, whether that's through APIs or micro services. And we're spending a lot of time and money making that happen. So what we're seeing and what we're hearing and what it does is it really helps us because there are a lot of customers out there on those big insurance software solutions like Duck Creek. Guidewire would be another one. And we have integrated with those solutions in such a way that those customers get access information from Verisk and analytics from Verisk or claim solutions from Verisk, in a way that makes it easier for us to operate, more efficient for them to operate. And what it also does is it gives us an opportunity for easier to sell because the integration is built in and it's connected. So we find it to be very customer-focused, and it also gives us some runway in accelerated pipeline for sales.

Mark, just a follow-up. Does the cloud conversion enable you to do more of those, whereas maybe a year ago when it was more on-prem, you wouldn't have the functionality to do it? Or is it just coincidence in terms of the timing?

So let me say it this way. I think what we have done over the last 20 years is we've had SaaS-based environments. So these are not locally installed solutions. So the SaaS-based business model facilitates this. Your question now is a good one. I think we can do it quicker and more efficiently when we want to integrate using the cloud and as we've kind of transitioned to cloud. So it's not been an enabler, but it has become more efficient in cost-effective.

Next question comes from the line of Jeff Meuler of Baird.

I appreciate all of the updates in terms of your current thinking on the cloud transition. I was hoping you could give us a similar update on the associated expense park. I think we said that there's a headwind from increased cloud transition costs this year. So just would love any thoughts on how much are you spending per year. When does it flip positive? And when it flips positive, is it a step function change? Or should it just be viewed in the context of expanding organic EBITDA faster than organic revenue over time because there is a reallocation of those savings?

Yes. Thank you, Jeff, for the question. There are several elements to it. And I know that you're asking it was in the context of cost, which I'll address. But I also want to make sure that there's an appreciation that there is a CapEx element to this. And then there is also the productivity element to this transition. First, on the cost. You are taking on an additional cloud capacity from the provider before you are eliminating some of that legacy. So you have kind of a redundant, redundant period. In addition, you were taking on recoding expense for the applications as you migrate them into that new environment. And so as we have been implementing this process across hundreds of applications in our various businesses, you have that upfront cost that is a negative cost impact, which we view as an investment. And we look at it on individual project-by-project basis. Our technology team does a great job tracking the specific costs and the savings, but think of this as rolling across the organization. And for the first year and second year, we are still in a net investment mode from a cost perspective within the business. CapEx will be more limited going forward, so you will be extracting CapEx savings over time because the CapEx intensity of our technology footprint is declining, but that's something that's achieved over time. And we're beginning to experience that in this second year of the project, but that will continue naturally into the third year and beyond. And so if we think about OpEx and CapEx, we're still in a net investment mode in the second year. We would expect that in the third year that turns into a positive contribution. Now the other thing to factor in is that, as…

And just to add to what you were saying there, Lee, and not trying to sort of specify sort of a particular level of margin impact. I do think of this transition as being an event at a moment in time. And it does have some discrete elements associated with them. Just to call out a few of them, there will come a moment where we're no longer computing on mainframe. We're not fully at that point yet, but there -- I mean, we will have an event where we'll get out the sledgehammers and literally break up the cores inside the mainframe. And that -- we're already reducing the load on the mainframe, and we can find some ways to benefit from that. We run power data centers, 2 of them, in the United States. We will close them at some point. There are fixed costs associated with data centers. And so that will be an event, and we'll call out those events for you when we get to those. And then something else, which I think is really extremely important, is that you used to buy compute capacity in relatively large chunks. And then as we move more towards the server environment, the chunks got smaller, but you're still buying chunks. In a world like that, anybody who's writing an algorithm, anybody who is demanding compute power, for them, you've already bought the capacity within limits. And so incrementally, it doesn't cost you anything. And in a world like that, you can actually be a little bit -- I don't want to use the word sloppy, but you can essentially use more compute capacity in how you want to get to the answer you're trying to get to. And maybe you don't have to cash that analysis you just did quite as much or you don't have to summarize at the column and row level once, and then work through those derivatives, et cetera. My point here being that there should be an interaction between how you analyze for -- how you compute in the context of analysis and the way that you consume computing capacity. And in a variabalized world, you have to pay more attention to that than you used to. And so our development and analytics are responding and need to respond to that. But on the other side of the transition you actually think differently about literally what do you encode that you did before so that you can be efficient in your use of compute capacity. So what I'm saying is there's a multiyear thing here. But on the other side, it is actually very different than where you were into this transition. You don't run physical facilities. You don't run really large hardware and you think very differently about how you structure analysis. And that will just be a more -- that's a better world for a company like ours.

I appreciate the comprehensive response. You addressed the InsurTech impact and the vertical software providers that serve the insurance industry. I want to ask about, I guess, the third category of maybe adjacent players to you, which is there's a lot of funding going to companies that are gathering data with or, I guess, horizontal ambitions, but some of them also have ambitions to apply the data to the insurance industry, and there's the real estate digital twin image capture companies, the satellite base, the telematics, there's a whole bunch of these companies that are out there. And I know you have the Verisk Data Exchange, but curious as to how you view the impact on Verisk or your customers from those types of options and if they're competitive partnership opportunities for you, et cetera.

Yes, sort of in reverse order on your question, yes, there is partnership opportunities. It would probably be of interest to you. If I took a list of the top 50 InsurTech companies, the number of them that we're in communication with today. When I say InsurTech companies, I don't mean new form insurance companies, I mean providers of solutions. And the number of those companies that we're in conversation with -- many of those conversations, they are coming and looking for us. So we start out aware of the fact that, in this world, you can start out with some programming capability and try to create something where you're hosting it. And it's mostly about digital workflows, et cetera. We see this all the time. And so we do pay attention to it. I would just say also that there are a lot of reasons why our customers lean into a relationship with us. Some of it has to do with the breadth of our family of solutions. Some of it has to do with our proven track record. Some of it has to do with reliability. And customers really care about that when you're talking about an enterprise-level application. There are a lot of reasons. And we're powered by really, really strong content assets. And a lot of the fill-in-the-blank tech start-ups, they don't start with content. So we never walk around feeling overly confident. We're very aware of these developments, but we do feel as if we start out in a very strong place in this discussion. And we like talking to these fill-in-the-blank techs and they like talking to us. So if there's some place where 1 plus 1 can be greater than two, we're very alert to that.

Next question comes from the line of Alex Kramm of UBS.

Sorry if I missed this earlier, but on the COVID impact, the 15% that grew 12% this quarter, did you -- or can you talk about where we are there? Do you feel like we are fully recovered? Or what areas do you still wait for, I guess, improvement? I guess I could point to a couple. But yes, where do you think we are in that transition?

Yes. Thank you, Alex. I appreciate the question. So I would say that we are -- when we look at our COVID-sensitive revenues across the business as a whole, we're looking at it business-by-business. And so we are seeing some recovery, stronger recovery in certain areas, for instance, on the property side. We've seen in the insurance front probably the strongest recovery. Some recovery in driving, although driving is -- would not be what we would describe as fully recovered at this point. In Energy and Specialized Markets, we are seeing a strong rebound in consulting revenues, so that is demonstrating relatively robust recovery. We're also seeing some strengthening in our new subscriptions, which will flow in over time, I think, reflecting some of the improved pricing dynamics. Whereas in DFS, there is an element, which I refer to our spend-informed analytics, which because of advertising and marketing, we have seen an uplift. And that's performing better than we expected, but the bankruptcy element of our business is still experiencing the challenges of all of the government support out there in the environment. And so that's yet to recover. It becomes very difficult to kind of quantify how far -- how much of a recovery. I would say it's certainly a partial recovery, not a full recovery, but the trends that we see, we expect to see continuing improvement in that recovery for the business. And it's probably worth noting in our insurance -- in the Insurance and in the Energy and Specialized Markets business, our COVID-sensitive revenues were up 20% year-over-year. Financial Services are still seeing a year-over-year decline, even though we've seen an improvement in spend-informed analytics and a deterioration -- or not a deterioration, but kind of the same level of declines on the bankruptcy side. So hopefully, that gives you a little bit of texture across the business for some of the trends that we're seeing. I would also note, naturally, it should come as no surprise, that our travel business internationally is still suffering significantly from very low international travel. And so that's an important component.

Okay. Maybe just a very quick follow-up on this. On the energy side, specifically, if I look at some of the recurring transactional breakouts, which -- I know they're not perfect, but it does look like a lot of the upside this quarter came from that consulting on the more transactional side. Given all the things that you're talking about with Lens, et cetera, is that not driving the impact yet that you are hoping for? Or are there maybe some retention issues elsewhere? Doesn't it look like it's flowing through the business quite yet, the success you were talking about there. So maybe just flesh that out a little bit more.

Sure, Alex. Thanks for asking that question as a follow-up in that regard. So I think it is a good distinction to make that the consulting element is where we are seeing that recovery on the COVID-sensitive side and focusing on the subscription side of the business, and I kind of want to build on my earlier comments. The impact of Lens, which has been very positively received by a lot of our clients, has been generating significant contract renewals with price increases in the mid- to high single digits. Now there are 2 elements to that in terms of its ongoing impact. One is going to be the rolling impact of that as subscriptions become -- come up for renewal. And the second element of that is that then, again, that subscription is something that will phase in over time given the nature of that. But the important point from my perspective is that we are seeing a very positive uptake. Clients are working with Lens. We've gotten several operational assessments. They've been very positive. And we've been able to achieve those price increases. So that will be based upon our feedback so far, a slow rolling but an improvement to the growth in that business, even before we also begin to utilize that platform to expand that customer set and the applications. We also are still experiencing some impact from the last cycles, loss of 1 client in the energy space and some consolidation in the upstream area that is having a near-term impact on the research component. So that's another element that's factoring into it. But I think the distinction that you made is relevant. Hopefully, that differentiates that near-term consulting boost against what we see as constructive longer-term trends from Lens, and the pricing experience that we've had and how that should flow through over time within the business.

Next question comes from the line of Andrew Steinerman of JPMorgan.

Lee, I wanted to ask you, as you've taken over the operational responsibility of Argus, what have you found in terms of the fit of Argus in terms of Verisk's ability to create further customer value, five new customer segments for Argus data or just innovate in general within a subscription model?

Yes. Thank you for the question, Andrew. I have been able to spend more time with the team at Verisk Financial Services. And one thing I would first emphasize is that they have been very focused on trying to integrate the data sets that we have from the various businesses and move from a more compartmentalized approach to the business to a focus on our broader client objectives. And in fact, Lisa has implemented some organizational changes that support that approach and focus from the business, which we think moves that to a more effectively integrated platform for our businesses. And we have also taken the steps structurally to move that business from a more consulting-oriented revenue base to more sustainable growth. And we are seeing that from a new business signing and pipeline perspective in the way that we are bringing on new business and how we're structuring it and the types of business. To your question, one thing that's important to emphasize is that Verisk's Financial Services, in many ways, has been an intellectual capital engine for much of the rest of the business. A lot of what they have learned in dealing with very large data sets and integrating them, managing them, data architecture elements have been exported to the rest of the business. Many of the data scientists, including our CIO, Nick Daffan; our Chief Analytics Officer, Vikas Vats, have come from that background and are -- we're drawing from their expertise. So there are other elements of the -- of what they've contributed to Verisk has been helpful. We are pulling from some of those externalized elements in a variety of ways analytically to developing new products, the replatforming of Argus 2.0 is an example of where we've been able to draw from some of that external expertise. So I think there is a good dialogue across the 2 entities. And we also look for interactions between the credit dimensions that Verisk Financial Services have and some of the insurance elements of our business to inform and generate new opportunities.

Next question comes from the line of Toni Kaplan of Morgan Stanley.

Wanted to ask another question on the fintech side. I guess, by partnering with the software platforms, it sounds like there's potential for upside from selling additional solutions on there. Just wanted to understand, compared to history before these platforms were as prevalent, were you providing a platform to your customers? Or are they just using their own platform? And so in this case, this is just complete upside? Or is there any revenue that is sort of lost by them going to a sort of software platform that's not yours?

No, there's not revenue loss by them going to a platform provided by another third party. So just to expand on that answer just a hair, so if you look at sort of over -- I'd say, over the course of the decade, you go back a decade ago, it was either -- basically, what we were doing was going to market either through our own platforms or our solutions were operating more as point solutions and most of the integration was occurring customer by customer. They were doing their own integration. So now that's where it's where we are today and where we're headed into the future. We are more platforms than we were, significantly more platform than we were. And that is constructive inside of the growth of our business now and into the future. And if you actually look at the pattern of investment, what are we spending money on, a great deal of it and a lot more than it used to be, is on developing software, which you should hear us building our own platforms. But when we strike a relationship with a third party that is itself, providing a platform. It's -- we're analyzing that in the context of, well, okay, we could go direct the customer through the integration themselves. But basically, that third-party platform that isn't ours is substituting for the customer's own integration efforts, but not in a way that it impacts the underlying value of what it is that we provide, which is being integrated and over there. So the whole movement towards platforms is customer-friendly and it's constructive for Verisk because we, ourselves, are doing a lot more of that than we used to.

That's helpful. And then just in the past couple of quarters, Financial Services has had single-digit EBITDA margins. Is this the new normalized margin? Or is there something depressing it temporarily? And any updated thoughts on strategic options?

Definitely not the new normal. Lee, I don't know if you want to add on that.

Yes. Toni, thanks for the question. It's not the case. We are -- what you are seeing in that quarterly impact is the impact of some of the contract transitions, but we are expecting, as we come through that third quarter, a period where we reached the end of that contract transition impact, that you will see more normalized margins within that business. So that is not -- what you see now is not the expected sustained element here.

And normal looks like what it did last year, for example?

In that vicinity.

Next question comes from the line of Manav Patnaik of Barclays

Yes, I just wanted to follow up on the Financial Services as well. We've heard the positive spin on the business for quite some time. But for 5 years now, the growth has declined. The margins have come down as well. So like you guys decided to cut the cord or what's the plan? How do we get comfortable that it can be additive to growth?

Thank you, Manav. And we -- it's a fair point. We understand the frustration in -- with regard to growth. I think it's important to understand that there are 2 factors that are influencing where the growth rates are right now that are very significant. One is the -- are the contract transitions that we believe are, one, absolutely the right operational decision. They are structural, and they are finite. And as I've just indicated in the answer to Toni, we move those after the third quarter of this year. Element is naturally the impact from COVID on the business on our COVID-sensitive revenues, which clearly had an impact on spend informed activity, bankruptcy activity and even some of the bank consulting revenue. And so when we are evaluating, and we are constantly evaluating what we do with all of our businesses and what are our options to optimize the value of that, the right time frame that we think is to look at what's the structural transitions and the impact from COVID. And so certainly, 2022 should be what we believe is a much more normalized level from a revenue, revenue growth and from a margin perspective that informs our view of the more normal operating state of the business as well as a sense of how the structural changes that we have implemented and the operating changes will demonstrate their impact more clearly in terms of growth at a top line and an EBITDA level. So in short, I think, as we move through these 2 temporal impacts and the structural impact on the contract transition, 2022 should be a much more normalized basis for us to be...

Well, I'll say it more strongly. 2020 would have been coming out year party for Verisk Financial, but for the pandemic. 2020 would have been a coming out party for Verisk Financial. All these changes that we're talking about making. And yes, I mean the fact that the business has an above-average level of transaction revenues relative to the mix that is in Verisk has caused it to sort of respond differentially. But beginning in 2018, we acknowledge changes that needed to happen in the business model. They were all packaged and on deck and ready and then the pandemic happens.

Okay. And then maybe just a similar question on Energy. I think Lens obviously has been doing really well, and you talked about energy transition growing. But I think, collectively, they're still a small part of the business, right? So how do you -- what is the other initiatives going on there as you helped us grow 7% in what's a pretty cyclical industry?

Yes. So in that situation, when we look at the rapidly changing landscape within power, I think it's important, Manav, to understand kind of a legacy perception of where Wood Mackenzie was from an oil and gas market, resource asset, pricing orientation and their expertise and where they have evolved and where they -- their potential to continue to evolve in an environment where the energy transition from carbon-based to alternative tools and all of the capital decision, investment decision, expense decisions that this client base investors are addressing is we are incredibly well-positioned. And Lens is the platform that puts us in the space to be able to capture the rapid growth in data sets and analytics for that business. We're already seeing it, as I indicated, in terms of the pricing on the legacy product. We're seeing it in the growth in our energy transition revenues, both on a consulting and subscription basis within chemicals. You saw an acquisition in metals and mining, which have increasing relevance given the importance of battery raw materials. And so we view Wood Mackenzie and PowerAdvocate, our primary energy businesses, as positioning themselves very well for capturing the growth in demand for those products. And we see through the impact on consulting revenues and some of the challenges on the subscription basis that growth potential ahead. So I think it's a combination of both that future opportunity and the success that we've had to date in moving that business forward. One piece of evidence from that, if you look at a number of our competitors in that space, I think you will see very differentiated performance from a revenue growth and an earnings growth perspective, reflecting the significant progress that we've made in moving it from that legacy orientation around the upstream oil and gas sector.

And our last question comes from the line of Ashish Sabadra of RBC Capital Markets.

I just wanted to focus on the strength in the software within the Insurance segment, both international as well as the life insurance -- or international as well as life insurance. You obviously talked about strength in the FAST business. I was wondering what's really driving it. Is it new customers? Is it ability to cross-sell? How do you -- can you comment on the pipeline? And maybe just a follow-up on that is -- there was a lot of discussion about platform and partnership, but how do you think about buying and building or increasing your software intensity and expanding on the platform that you already have?

Sure. Well, thank you for the question. Let me describe the 2 different verticals or 2 different businesses described. So first of all, with regard to international software, so the most part that represents our Sequel offering. So we were talking a little bit about platforms before the [indiscernible] the claim systems. We are a player in the market. We are the most significant player in the market. And that is about growth in customers. That is about extension of different solutions and products, including some of the acquisitions we did that helped extend that platform, line space, roll block sequel, all of those are this interconnected ecosystem. And we've taken that capability as it relates to, for the most part, specialty and commercial lines, and started to extend it outside of the U.K. and even into the United States. So those are good wins, those are good extensions and it's been very positive. If I was to go over to the FAST side, which is the life side of things, what we've done is we've infused it with some analytics. But in large part, what you're seeing is, there are some very major life insurers who've made some very major decisions, and they've chosen FAST. These are very long-term contracts, 5 and 10 years. And we are implementing as we speak, and that will be a very nice and very substantial run. Because as we implement, what we will get is I'll refer to it as subscription-types of revenue. And as they put on new products and there's new volumes, we would see increased revenue on each of those lines. So the major wins across the life insurance software platform space, it's been with FAST, in almost every case that we're aware of. And again, those are new logos as well as extension into other solutions or products within existing customers. So hopefully, that answers your question. And what I did try to at least kind of conclude in there, we have significantly increased the investment to make sure we transition to the SaaS environment, to transition to the cloud. We've extended both our capabilities through acquisition and build.

Thank you. I will turn the call over to our presenters for any closing remarks.

Thank you. This is Scott. I'm seeing some more names. Okay. we are concluded. Thank you all for your time today, your interest. We'll be following up with a number of you. And appreciate as always the dialogue. Have a great rest of the day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.