Elizabeth Mann
Chief Financial Officer at Verisk Analytics
Thanks, Lee, and good day to everyone on the call. On a consolidated and GAAP basis, second quarter revenue was $717 million, up 6.2% versus the prior year, reflecting consistent levels of growth across both underwriting and claims. Income from continuing operations was $308 million, up 51% versus the prior year, while diluted GAAP earnings per share from continuing operations were $2.15, up 53% versus the prior year. The GAAP figures include a cumulative $102 million net gain associated with retained interest in previously disposed businesses as well as a gain associated with the bond tender transaction we entered in June. The underlying EPS growth reflects strong revenue and profit growth combined with a lower effective tax rate and a lower average share count.
Moving to our organic constant currency results for the second quarter. Adjusted for non-operating items as defined in the non-GAAP financial measures section of our press release, our operating results demonstrated consistent growth across both underwriting and claims. OCC revenues grew 6% with growth of 6% in underwriting and 5.8% in claims. This was a slowdown in growth as expected from the first quarter as we overlap the tough comparison to our largest ever transactional revenue dollar quarter in the second quarter of 2023.
Our subscription revenues, which comprised 81% of our total revenue in the quarter, grew 8.3% on an OCC basis during the second quarter. We experienced broad-based growth across most of our subscription-based solutions with strong renewals and expanded relationships with existing customers and solid sales of new solutions.
Our subscription growth also reflects the benefit of conversion to subscription from previously transactional contracts. In some cases, temporary assignments or pilots are converting into longer-term contracts. In other cases, customers are looking to move away from pricing mechanisms tied to volume and instead opting for fixed pricing to give more visibility in their own cost structures.
We are experiencing this trend across underwriting data solutions, anti-fraud solutions, specialty and property estimating solutions. And we expect the impact of these conversions to continue for the remainder of the year.The largest contributor to subscription growth continues to be forms rules and loss costs, where we are benefiting from improved price realization in our renewals as we continue to modernize our platform and deliver more value and insights to our clients through features like Experience Index that Lee spoke about earlier.
In anti-fraud, we experienced underlying strong price realization in the business with growth augmented by sales of new solutions, including claims coverage identifier and claims scoring, our new real-time monitoring tool that uses both rules-based and predictive models to identify and triage suspected fraudulent claims. And within extreme event solutions, we delivered another quarter of high single-digit subscription growth driven by strong multiyear renewals with existing clients as well as the addition of new logos to Verisk.
Our transactional revenues, representing 19% of total revenue in the second quarter, declined 3% on an OCC basis, reflecting a tough comparison versus the prior year, a drag on growth from conversion to subscription and the impact of more year-over-year weather-related claims activity. This was offset in part by strong growth contribution from our life insurance business and securitization within our extreme events business.
Specific to the tough comparisons, last year, transactional revenues increased 12.4% and included benefits from elevated levels of auto shopping activity as well as the large non-rate action deal we had called out. Our revenue associated with auto shopping did continue to grow in this year's second quarter, but not at the level of the trailing 12 months. We expect those tough comparisons in auto to continue for the balance of the year.
And with regard to the weather-related claims activity, while frequency of events was up in the second quarter, the severity events and associated claims volume from those events was down year-over-year from record levels in 2023. It is this volume metric that impacts our transactional revenues within property estimating solutions.All that said, we continue to experience a longer-term secular trend of growing weather-related claims across the property sector. And in fact, while 2024 claims volumes are down in the second quarter year-over-year, they are still continuing an upward trend as they are running approximately 20% above the trailing five-year average.
Moving now to our adjusted EBITDA results. OCC adjusted EBITDA growth was 8.5% in the quarter. While total adjusted EBITDA margin, which includes both organic and inorganic results, was 55.4%, up 130 basis points from the reported results in the in the prior year. As we've said the past, margin rate in any given quarter can be influenced by revenue mix and timing of spending. So we think it's useful to look at our margin on a trailing 12-month basis, which, as of June 30, 2024, was 54.3%, up 120 basis points over last year's level.
This level of margin expansion reflects the positive impact of sales leverage, cost discipline and our global talent optimization efforts. Our margins also reflect a lower level of headcount growth in the quarter we expect to accelerate hiring in the back half of year to support our growth investments.For the full year 2024, we continue to expect our margins to be in the 54% to 55% range. We remain confident in our ability to meet our margin expansion targets while strategically investing in future growth opportunities.
Continuing down the income statement, net interest expense was $29 million for second quarter compared to $32 million in the prior year, reflecting higher interest income on cash balances. During the second quarter, we issued $600 million of senior notes due 2034 and successfully tendered for $400 million of our notes due in 2025. The net effect of these two financing transactions is that the ongoing run rate for net interest expense will be higher in the second half of the year than it was in the first half. That said, we are comfortable with our current leverage, which at 2x is at the low end of our targeted range of 2x to 3x EBITDA.
On taxes, our reported effective tax rate was 21.7% compared to 23.8% in the prior year quarter. The year-over-year decrease in the tax rate is primarily due to the timing of certain discrete items that we do not expect to repeat. We believe that our tax rate for the full year 2024 will be at the low end of the 23% to 25% range. There could some quarterly variability related to employee stock option exercise equity. Adjusted net income increased 13% to $249 million, and diluted adjusted EPS increased 15% to $1.74 for the quarter. The increase is primarily driven by solid revenue growth, strong margin expansion, a lower effective tax rate and a lower average share count. This was partially offset by higher depreciation and amortization expense.
From a cash flow perspective, on a reported basis, net cash from operating activities increased 10% to $212 million while free cash flow increased 14% to $154 million. This is the first quarter that our cash flow metrics demonstrate the results of our insurance-only business and are reflective of the operating cash flow of the new Verisk. From an M&A perspective, we did not acquire or dispose of any businesses in the quarter. But we did receive $112 million in cash proceeds related to the prior sales of our health care business in 2016 and our specialized markets business in 2022. In both of those cases, we maintained a small structured equity position, which was monetized in this quarter.
As of June 30, we had $632 million in cash on our balance sheet, which gives us the financial flexibility to continue self-fund the investment back into the business. We are also committed to returning capital shareholders. During the second quarter, we initiated a $150 million accelerated share repurchase program, which was completed in July. As of June 30, we had $1.3 billion in capacity remaining under our share repurchase authorization.
We are pleased with our results for the second quarter and the first half of the year. Our outlook for 2024 remains unchanged. More specifically, we continue to expect consolidated revenue for 2024 to be in the range of $2.84 billion to $2.9 billion. We expect adjusted EBITDA to be in the range of $1.54 billion to $1.6 billion and adjusted EBITDA margin in the 54% to 55% range.
Below the line, we expect fixed asset depreciation to be at the high end of the range as we continue to put new projects into service and the tax rate to be at the low end of the range, given certain onetime discrete items for the first half of the year. Combined with the slightly higher net interest expense due to our refinancing, the net result is that we still expect adjusted earnings per share in the range of $6.30 to $6.60. A complete listing all guidance measures can be found in the earnings slide deck, which has been posted to the Investors section of our website, verisk.com.
And now I will turn the call back over to Lee for some closing comments.
