Lee Shavel: And I’ll cap it off by saying another dimension of incremental growth is the ability to move some of our traditional products into more of a SaaS type of environment. And there in our extreme events business, the migration to more of a SaaS model, we believe opens up opportunity to deliver more value to that segment of our clients as well. But thanks for the question.
Operator: Your next question comes from the line of Surinder Thind from Jefferies. Please go ahead.
Surinder Thind: Thank you. In terms of just the go-to-market strategy the investment in the sales force at this point, can you provide a little bit more color in terms of are there like changes in compensation structure or headcount thing that you’re looking for? How should we think about that part of the equation?
Lee Shavel: Yes. Thank you, Surinder. So there are a number of elements and I really have to complement the organization for its receptivity, to outside perspectives, on what we could be doing better. We looked at it across all of our businesses. And certainly, compensation structure was an area of focus. And there, I think we — there were two things. One, we looked at where market levels were both from a level and from a composition standpoint, so that our sales team felt as though they were being fairly treated, create a good opportunity and aligning our interest with the customer. And we believe that that will improve our retention and make certain that they are focused on the opportunities that generate the most value for us.
We also spent time looking at pricing, relative to value and where we feel as though we’re delivering demonstrable value to our clients, and how we can be more responsive to structuring our pricing in a way that aligns, with our clients’ perception of value and what their needs are. So, I would just identify those as two of the primary functions. I would add, somewhat outside of this, we have also been working to make certain that our sales effort is well tied into our senior-level strategic dialogue, so that as we have driven a stronger level of dialogue, we are communicating effectively internally to capitalize on opportunities for sales on existing products that our clients may not be aware of, or we find higher support because of the value proposition at a senior level within the organization.
And so, that’s an area where we expect that we’ll be able to do a better job as well.
Operator: Your next question comes from the line of Andrew Nicholas from William Blair. Please go ahead.
Q – Andrew Nicholas: Hi, good morning. Thanks for taking my question. I wanted to ask about the higher-growth businesses, a different way. I think back in the Investor Day, you talked about those potentially representing 20% of your business in 2025. Is there a way to kind of comment on that trajectory, and how those faster-growth businesses performed in 2023, specifically?
Elizabeth Mann: Yes. This is Elizabeth. Yes, I can comment on that. They continue to be on the path and on the trajectory to achieve that goal. They’ve achieved strong results in 2023. And the largest change in our growth mix in 2023 versus kind of the algorithm laid out at Investor Day, has been the overperformance of the core businesses.
Operator: Your next question comes from the line of Russell Quelch from Redburn Atlantic. Please go ahead.
Q – Russell Quelch: Yes. Appreciate, you having me on. I also appreciate the strategy you’ve been making in improving and growing the business. But I want to look at the free cash flow yield. It’s still at the low end of the peer group. And Elizabeth did mention in her remarks, I think a focus on growing free cash flow. So maybe you could expand on this a little bit, and how much we should expect free cash flow to grow in 2024 and beyond.
Elizabeth Mann: Yes. Thanks for the question, Russell. We’ll have to look with you at that stat on free cash flow yield because we think the Insurance business has very strong free cash flow. Again, looking at it maybe as a percent of revenue may understate the strength of it. So, we think it’s been growing. I mean, a demonstration of the growth in the Q4 number, which has grown over the prior year, even though the prior year numbers still include the energy business. So we are excited about the free cash flow generation of the business. We don’t give guidance on it, but conceptually it should continue to grow roughly in line with our bottom line. And I think the purest demonstration, we can give of that confidence has been the commitment on the dividend increase.
Lee Shavel: Yes. And Russell the one thing I would add is I think that if you start with free cash flow given accounting differences over time should even out. And so it should approximate our overall EBITDA growth rate assuming that the CapEx is growing commensurate with that. I do think in 2024, we’re seeing slightly higher CapEx growth, because of what we see as a number of opportunities within the business. Part of that relates to the generative AI opportunity. And so we may have periods of higher level of CapEx investment that may bring the overall free cash flow growth down. But over the long-term we see that very — should be very commensurate with our overall adjusted EBITDA growth.
Operator: Your next question comes from the line of Seth Weber from Wells Fargo Securities. Please go ahead.
Seth Weber : Hi. Thanks. Good morning. Lee, I’ve heard a couple of times you talked about pricing opportunities. I think you called out extreme events and property estimating. I’m just trying to maybe get some more details on that. Do you think that will impact 2024? Or is that a longer-term kind of play here? And is this just sort of the first couple of areas where you’re finding these new opportunities and we should expect more of that kind of going forward? Or any way you can help frame this pricing opportunity? Thank you.
Lee Shavel: Yes. Seth, thanks for the question. It’s difficult to kind of isolate it, because it occurs across our business. I would say that certainly that those pricing improvements that I’ve referred to in terms of new contract renewals are factored into our 2024 guidance from an overall revenue growth perspective. So, in that regard, we’re beginning to see some of that influence that our near-term expectations. But I do believe that it is a source of growth for us longer-term. And it’s not a really very different than what we described as our general operating model, which is that we believe that we can create much broader value for the industry, by investing in this data and technology and capturing that particularly as we add value to our existing clients is largely value-driven pricing. And so that supports the — that longer-term 6% to 8% growth target that we are working to achieve on a predictable and consistent basis.
Operator: Your next question comes from the line of Greg Peters from Raymond James. Please go ahead.
Unidentified Analyst : Hi. Good morning. This is Sid on for Greg. I wanted to focus on Slide 18 of your investor deck and when you talk about your capital management philosophy. And just moving forward curious, how we should view repurchases following in your capital management framework versus acquisitions, or internal investments, et cetera?
Elizabeth Mann : Yes. Thanks for the question, Sid. As we highlight there, our capital management philosophy really focuses on our returns on invested capital. We will look to invest in the business. Our CapEx range that we’ve given you for the year shows the organic investment in the business. On the M&A side, we are active in the market. And we will continue to evaluate opportunities and what we see out there for strong businesses which bring something additive to the Verisk business. And those two things should be generating returns well above our cost of capital. And we assess that and continue to track it. As we highlighted in the script, our incremental returns on invested capital this year were approximately 19%. To the extent, we don’t find opportunities there, we will continue to return capital to shareholders, as you’ve seen us do pretty consistently in the past.
Lee Shavel: And Greg, one thing that I would add and I want to thank all of our investors who participated in the year-end investor survey that was conducted. We thought it was important to get feedback after the first three quarters and following Investor Day. And specific to your point and Elizabeth’s comments Greg, one very clear priority from the investors that we surveyed was a preference for internal investment kind of recognizing our ability to leverage that and generate very high returns. And so, we appreciate that input. We share the view that that’s very additive to our business and will clearly be a priority for us.
Operator: Your final question today comes from George Tong from Goldman Sachs. Please go ahead.
George Tong: Hi. Thanks. Good morning. I wanted to dive a little bit deeper into some of the transaction revenue trends you’re seeing. Adjusting for storm comps, transaction revenue growth was 4% on an organic constant currency basis in 4Q. Directionally in 2024, how do you expect transaction revenue growth to trend from that 4% normalized for storm comps considering trends like auto rate shopping behavior and the conversion of transaction revenue to subscription revenue? What are some of the puts and takes that gets you higher or lower than 4% transaction revenue growth this year?
Elizabeth Mann: Yes. Thanks for the question, George. You’re right. The transaction revenue is — well, first of all it’s coming off a full year of very strong transactional growth, double digit I think for the prior four quarters. So we are sort of lapping that period. The biggest driver in that elevated strength a big piece of it was the auto shopping activity that we’ve talked about before and the weather trends actually being another element of that transactional growth. That was actually offset by some headwinds in our anti-fraud business, as they converted transactional customers to subscription customers. So looking forward, I think we expect those trends to normalize. Again, we’re not assuming elevated weather activity. The auto shopping trends will begin to normalize.
Operator: We thank you for participating on the call today. You may now disconnect. Have a great day.
