Category Archives: Verisign

Verisign Q1 2013 Report: net 1.99 million more .com/.net, 8.8 million new registrations, 15% revenue growth

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VeriSign, Inc. reported financial results for the first quarter ended March 31, 2013. Verisign got a 15% year-over-year revenue growth in Q1 2013. The domain related numbers are:

  • Verisign Registry Services added 1.99 million net new names and ended the first quarter with 123.1 million active domain names in the zone for .com and .net, representing a 5.5 percent increase year over year.
  • In the first quarter, Verisign processed 8.8 million new domain name registrations as compared to 8.9 million for the same quarter a year prior.

To make a comparison with Q4 2012, Verisign Registry Services only added 1.25 million net new names in the fourth quarter of 2012 and the new .com and .net registrations totaled 7.9 million. It seems that 2013 started with a bang…

Here is the complete report:

VeriSign, Inc. (NASDAQ: VRSN), the global leader in domain names, today reported financial results for the first quarter ended March 31, 2013.

First Quarter GAAP Financial Results
VeriSign, Inc., and subsidiaries (“Verisign”) reported revenue of $236 million for the first quarter of 2013, up 15 percent from the same quarter in 2012. Verisign reported net income of $85 million and diluted earnings per share (EPS) of $0.52 for the first quarter of 2013, compared to net income of $68 million and diluted EPS of $0.42 in the same quarter in 2012. The operating margin was 56.4 percent for the first quarter of 2013 compared to 48.1 percent for the same quarter in 2012.

First Quarter Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $94 million and diluted EPS of $0.58 for the first quarter of 2013, compared to net income of $68 million and diluted EPS of $0.42 for the same quarter in 2012. The non-GAAP operating margin was 59.6 percent for the first quarter of 2013 compared to 51.9 percent for the same quarter in 2012. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.

“The first quarter demonstrates our continued focus and discipline in the execution of our strategic framework,” commented Jim Bidzos, executive chairman, president and chief executive officer.

“We are pleased with the successful completion of our $750 million senior unsecured notes offering,” stated George Kilguss III, senior vice president and chief financial officer.

Financial Highlights

  • On April 16, 2013, Verisign issued $750 million of 4.625% Senior Notes due May 2023. Verisign used a portion of the proceeds from the offering to repay the $100 million in outstanding indebtedness under its existing revolving credit facility and intends to use the remaining amount for general corporate purposes, including, but not limited to, the repurchase of shares under its share repurchase program.
  • Verisign ended the first quarter with Cash, Cash Equivalents, Marketable Securities and Restricted Cash of $1.57 billion, an increase of $9 million from year-end 2012.
  • Cash flow from operations was $151 million for the first quarter compared with $110 million for the same quarter in 2012.
  • Deferred revenues on March 31, 2013, totaled $847 million, an increase of $34 million from year-end 2012.
  • Capital expenditures were $17 million in the first quarter of 2013.
  • During the first quarter, Verisign repurchased approximately 3.0 million shares of its common stock for a cost of approximately $132 million. At March 31, 2013, approximately $844 million remained available and authorized under the current share repurchase program.
  • For purposes of calculating diluted EPS, the first quarter diluted share count included 7.9 million shares related to the subordinated convertible debentures, compared with 2.5 million shares in the same quarter in 2012. These represent diluted shares and not shares that have been issued.
  • Due to the stock price exceeding the subordinated convertible debentures trigger price during the first quarter of 2013, holders have the option to convert the debentures into common stock during the second quarter of 2013. Consequently, the debt component of the subordinated convertible debentures, the related embedded derivative, and deferred tax liability were reclassified from long-term liabilities to current liabilities, while the associated unamortized debt issuance costs were reclassified from long-term assets to current assets, as of March 31, 2013.

Business Highlights

  • Verisign Registry Services added 1.99 million net new names and ended the first quarter with 123.1 million active domain names in the zone for .com and .net, representing a 5.5 percent increase year over year.
  • In the first quarter, Verisign processed 8.8 million new domain name registrations as compared to 8.9 million for the same quarter a year prior.

Non-GAAP Items
Non-GAAP financial results exclude the following items that are included under GAAP: discontinued operations, stock-based compensation, amortization of other intangible assets, impairments of goodwill and other intangible assets, restructuring charges, contingent interest payments to holders of the subordinated convertible debentures, unrealized gain/loss on contingent interest derivative on subordinated convertible debentures, and non-cash interest expense. Non-GAAP financial information is also adjusted for a 28 percent tax rate starting from the third quarter of 2012, and 30 percent for the other periods presented herein, both of which differ from the GAAP tax rate. A table reconciling the GAAP to non-GAAP operating income and net income is appended to this release.

About Verisign
As the global leader in domain names, Verisign powers the invisible navigation that takes people to where they want to go on the Internet. For more than 15 years, Verisign has operated the infrastructure for a portfolio of top-level domains that today include .com, .net, .tv, .edu, .gov, .jobs, .name and .cc, as well as two of the world’s 13 Internet root servers. Verisign’s product suite also includes Distributed Denial of Service (DDoS) Protection Services, iDefense Security Intelligence Services and Managed DNS. To learn more about what it means to be Powered by Verisign, please visit VerisignInc.com.

Verisign’s 2012 Q4 Domain Data: 252 million domains worldwide, 121 million .com and .net (INFOGRAPHIC)

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Yesterday, Verisign released the latest issue of the Domain Name Industry Brief, which showed that the Internet grew by more than six million domain names in the fourth quarter of 2012. The total number of registered domain names now stands at more than 252 million, which represents a 2.5 percent growth rate over the third quarter of 2012. This marks the eighth straight quarter with greater than 2 percent growth.

More than six million domain names were added to the Internet in the fourth quarter of 2012, bringing the total number of registered domain names as of Dec. 31, 2012, to more than 252 million worldwide across all Top-Level Domains (TLDs), according to the latest Domain Name Industry Brief.

The order of the top TLDs in terms of zone size changed slightly when compared to the third quarter. In Q4’2012, the largest TLDs in terms of base size were, in order: .com, .de (Germany), .net, .tk (Tokelau), .uk (United Kingdom), .org, .cn (China),  .info,.nl (Netherlands) and .ru (Russian Federation).

The base of Country Code Top-Level Domains (ccTLDs) was 110.2 million domain names, a 5 percent increase quarter over quarter, and a 21.6 percent increase year over year in the base.

The .com and .net TLD registrations experienced a 6.4 percent increase over Q4’2011, bringing the combined total number of domain names in the adjusted zone to approximately 121.1 million. New .com and .net registrations totaled 8.0 million during the fourth quarter of 2012. In the fourth quarter of 2011, new .com and .net registrations totaled 7.9 million.

The .com and .net renewal rate for the third quarter of 2012 was 72.9 percent, up from 72.5 percent in the third quarter of 2012.

Verisign’s average daily Domain Name System (DNS) query load during the fourth quarter of 2012 was 77 billion, across all TLDs operated by Verisign, with a peak of 123 billion. Compared to the third quarter of 2012, the daily average increased 16 percent and the peak increased 20.4 percent.

The order of the top TLDs in terms of zone size changed slightly when compared to the third quarter, as .cn (China) moved up a ranking from the eighth largest TLD to the seventh largest TLD, resulting in .info moving down one ranking. All other TLDs in the top 10 maintained their rankings.

infographic-dnib-april2013The latest issue of the Domain Name Industry Brief also offers a high-level overview of the challenges and opportunities that big data presents companies of all sizes. “Big Data Can Pose Big Challenges, and Opportunities, for Organizations” also includes a synopsis of the data generated within the DNS, and how companies could use this data to inform business strategy and possibly improve network security.

.NAME price increaces to $6.60 effective August 1, 2013

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Verisign sent a letter to ICANN about an upcoming fee change in .name domain names. The letter notifies ICANN and all .name ICANN accredited registrars about the registry price increase for .name domain names that is going to be effective August 1, 2013.

2nd level .name registrations will increase from $6.00 to $6.60 per year while 3rd level registrations will be $5.77 per year.

Lately it seems that all ICANN/Verisign correspondence is about registry price increases after Verisign lost the right to increase .com prices for the next 6 years. Just before Christmas ICANN announced that .net price increases to $5.62 on July 1, 2013.

Verisign Reports 13 Percent Year-Over-Year Revenue Growth in 2012

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VeriSign, Inc. (NASDAQ: VRSN), the .com and .net registry, announced today financial results for the fourth quarter of 2012 and year ended Dec. 31, 2012. Verisign reported 13 percent year-over-year revenue growth in 2012.

There is no mention on the report that although the U.S. Department of Commerce approved the renewal of Verisign’s agreement with the Internet Corporation for Assigned Names and Numbers (ICANN) to serve as the authoritative registry operator for the .com registry from December 1st, 2012 to November 30th, 2018, Verisign lost the right to raise the wholesale price of .com for the next 6 years.

Verisign Registry Services added 1.25 million net new names and ended the fourth quarter with 121.1 million active domain names in the zone for .com and .net, representing a 6.4 percent increase year over year.

On Dec. 19, 2012, Verisign announced that as of July 1, 2013, the registry fee for .net domain names will increase from $5.11 to $5.62.

Here is the complete announcement:

RESTON, VA – Jan. 24, 2013 – VeriSign, Inc. (NASDAQ: VRSN), the trusted provider of Internet infrastructure services for the networked world, announced financial results for the fourth quarter of 2012 and year ended Dec. 31, 2012.

Fourth Quarter GAAP Financial Results
VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $230 million for the fourth quarter of 2012, up 13 percent from the same quarter in 2011. Verisign reported net income of $106 million and diluted earnings per share (EPS) of $0.65 for the fourth quarter of 2012, compared to net income of $54 million and diluted EPS of $0.34 for the same quarter in 2011. The operating margin was 58.8 percent for the fourth quarter of 2012 compared to 45.6 percent for the same quarter in 2011. Results for the fourth quarter of 2012 included non-recurring pre-tax benefits of $13.6 million, split $5.8 million and $7.8 million between continuing operations and discontinued operations, respectively, primarily related to reimbursements of previously incurred litigation and defense costs, received upon settlement with the selling shareholders of a previously acquired business. Additionally, results for the fourth quarter of 2012 include pre-tax benefits of $5.5 million related to a change in the estimated bonus payout. Together these items increased the operating margin by 4.9 percent and diluted EPS by $0.07. Results for the fourth quarter of 2011 included a pre-tax, $4 million non-operating accrued expense, which was non-recurring in nature and which reduced diluted EPS by $0.02.

Fourth Quarter Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $96 million and diluted EPS of $0.59 for the fourth quarter of 2012, compared to net income of $64 million and diluted EPS of $0.40 for the same quarter in 2011. The non-GAAP operating margin was 62.0 percent for the fourth quarter of 2012 compared to 50.9 percent for the same quarter in 2011. Non-GAAP results for the fourth quarter of 2012 included non-recurring pre-tax benefits of $5.8 million recorded in continuing operations, primarily related to reimbursements of previously incurred litigation and defense costs, received upon settlement with the selling shareholders of a previously acquired business. Additionally, the non-GAAP results for the fourth quarter of 2012 include pre-tax benefits of $5.5 million related to a change in the estimated bonus payout. Together these items increased the operating margin by 4.9 percent and diluted EPS by $0.05. Results for the fourth quarter of 2011 included a pre-tax, $4 million non-operating accrued expense, which was non-recurring in nature and which reduced diluted EPS by $0.02. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.
“In 2012, Verisign marked 15 years of uninterrupted availability for .com and .net and we renewed the .com Registry Agreement for an additional six years. Our performance continues to demonstrate discipline and operational focus. In 2013, we will continue to seek quality growth, while protecting and managing our business,” said Jim Bidzos, chairman and chief executive officer of Verisign.

2012 GAAP Financial Results
For the year ended Dec. 31, 2012, Verisign reported revenue of $874 million, up 13 percent from $772 million in 2011. Verisign reported net income of $320 million and diluted EPS of $1.95 in 2012, compared to net income of $143 million and diluted EPS of $0.86 in 2011. The operating margin for 2012 was 52.4 percent compared to 42.7 percent in 2011.

2012 Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $322 million and diluted EPS of $1.97 for 2012, compared to net income of $249 million and diluted EPS of $1.49 in 2011. The non-GAAP operating margin for 2012 was 56.2 percent compared to 49.7 percent in 2011. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.

Financial Highlights

  •  Verisign ended the fourth quarter of 2012 with Cash, Cash Equivalents, Marketable Securities and Restricted Cash of $1.56 billion, an increase of $211 million from year-end 2011.
  • Cash flow from operations was $171 million for the fourth quarter of 2012 and $538 million for the full year 2012, compared with $124 million for the same quarter in 2011 and $336 million for the full year 2011.
  • Deferred revenues ended the fourth quarter of 2012 totaling $813 million, an increase of $84 million from year-end 2011.
  • Capital expenditures were $13 million in the fourth quarter and $53 million for the full year.
  • During the fourth quarter, Verisign repurchased approximately 2.3 million shares of its common stock for a cost of $94 million. During the full year 2012, Verisign repurchased approximately 7.7 million shares of its common stock for a cost of $315 million. On Dec. 5, 2012, the Board of Directors authorized the repurchase of up to approximately $458.8 million of our common stock, in addition to the approximately $541.2 million of our common stock remaining available for repurchase under the previous 2010 Share Buyback Program, for a total repurchase of up to $1.0 billion of Verisign common stock. At Dec. 31, 2012, approximately $976 million remained available and authorized for share repurchases.
  • For purposes of calculating diluted EPS, the fourth quarter diluted share count included 6.4 million shares related to the convertible debentures. These represent dilutive shares and not shares that have been issued. There was no dilution from the convertible debentures in the same quarter of 2011.
  • Due to the stock price not exceeding the convertible debentures trigger during the fourth quarter of 2012, the debentures are no longer convertible starting Jan. 1, 2013. Consequently, the debt component of the convertible debentures, the related embedded derivative, and deferred tax liability were reclassified from current liabilities to long-term liabilities, while the associated unamortized debt issuance costs were reclassified from current assets to long-term assets, as of Dec. 31, 2012.

Business and Corporate Highlights

  • Verisign Registry Services added 1.25 million net new names and ended the fourth quarter with 121.1 million active domain names in the zone for .com and .net, representing a 6.4 percent increase year over year.
  • Verisign processed 8.0 million and 33.1 million new domain name registrations for .com and .net, representing 0.9 percent and 3.0 percent increase year over year, in the fourth quarter and full year 2012 periods, respectively.
  • On Nov. 30, 2012, Verisign announced that the U.S. Department of Commerce approved the renewal of Verisign’s revised agreement, on the terms described in that announcement, with the Internet Corporation for Assigned Names and Numbers (ICANN), to serve as the authoritative registry operator for the .com registry for the term commencing on Dec. 1, 2012 through Nov. 30, 2018.
  • On Dec. 19, 2012, Verisign announced that as of July 1, 2013, the registry fee for .net domain names will increase from $5.11 to $5.62.

Non-GAAP Items
Non-GAAP financial results exclude the following items that are included under GAAP: Discontinued operations, stock-based compensation, amortization of other intangible assets, impairments of goodwill and other intangible assets, restructuring charges, contingent interest payments to holders of our Convertible Debentures, unrealized gain/loss on contingent interest derivative on Convertible Debentures, and non-cash interest expense. Non-GAAP financial information is also adjusted for a 28 percent tax rate starting from the third quarter of 2012, and 30 percent for the other periods presented herein, both of which differ from the GAAP tax rate. A table reconciling the GAAP to non-GAAP operating income and net income is appended to this release.

Today’s Conference Call
Verisign will host a live conference call today at 4:30 p.m. (EST) to review the fourth quarter and full year 2012 results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (913) 312-0637 (international). A listen-only live web cast and accompanying slide presentation of the fourth quarter and full year 2012 earnings conference call will also be available at http://investor.verisign.com. A replay of this call will be available at (888) 203-1112 or (719) 457-0820 (passcode: 1285042) beginning at 8:00 p.m. (EST) on Jan. 24, 2012, and will run through Feb. 1, 2012, at 7:00 p.m. (EST). An audio archive of the call will be available at https://investor.verisign.com/events.cfm. This news release and the financial information discussed on today’s conference call are available at http://investor.verisign.com.

About Verisign
VeriSign, Inc. (NASDAQ: VRSN) is the trusted provider of Internet infrastructure services for the networked world. Billions of times each day, Verisign helps companies and consumers all over the world connect between the dots. Additional news and information about the company is available at www.verisigninc.com.

Verisign Declines Voluntary Participation in the .net Contractual Compliance Audit Requested by ICANN

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ICANN (Internet Corporation for Assigned Names and Numbers) requested from Verisign (the .com and .net registry operator) a contractual compliance audit for the .net TLD.

With a letter dated 8 of January 2013 to ICANN, Verisign declined the invitation to coluntarily participate in  the audit. Verisign explained that it has no obligations under its .net registry agreement with ICANN to comply with the proposed audit. So absent such express constractual obligations. Verisign will not submit itself to an audit by or at the direction of ICANN of its books and records.

Verisign says that it will welcome the opportunity yo cooperate with ICANN in the future in any audits of TLDs operated by Verisign for which the applicable registry agreement contains sufficient audit rights.

It seems that Verisign is a bit defensive after the .com registry renewal that will not allow Verisign to increace the .com price for the next 6 years.

.net price increases to $5.62 on July 1, 2013 and at $8.20 until 2017

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Verisign announced today that the .net registry fee will be increased from $5.11 to $5.62. This price does NOT include the $0.75 ICANN fee. So the actual wholesale fee paid by the registrars will be $6.37. Verisign’s target certainly is to reach the .net price at $8.20 until 2017.

Verisign is allowed by it’s contract with the Internet Corporation for Assigned Names and Numbers (ICANN) to increase the registry price for .net 10% every year. The last price increase for .net was done on January 15th 2012. Price went up 10%: from $4.65 to $5.11.

On November 30th Verisign, Inc., the registry operator for .com, got it’s contact renewed for another 6 years. The U.S. Department of Commerce approved the renewal of Verisign’s agreement with ICANN with the contract running from December 1st, 2012 to November 30th, 2018. Although Verisign got the contract renewal, it lost the right to raise the wholesale price of .com for the next 6 years. In the previous contract running from 2006 up to 2012 Verisign was able to raise .com prices 4 times.

This puts pressure on Verisign to increase revenue and of course the easy way out is to increase .net prices by 10% every single year until 2017. The .net contract expires on the 1st of July 2017. So the expected 2017 .net price will be: $8.20. That will be higher that the current .com price that will stay at $7.85 until 2018. (.net has a much higher ICANN fee that is not included in these prices)

This is the complete press release from Verisign:

Verisign Announces Increase in .Net Registry Fee

RESTON, VA–(Marketwire – Dec 19, 2012) – VeriSign, Inc. (NASDAQ: VRSN), the trusted provider of Internet infrastructure services for the networked world, today announced, effective July 1, 2013, an increase in the registry domain name fee for .net top-level domain names, per its agreement with the Internet Corporation for Assigned Names and Numbers (ICANN).

As of July 1, 2013, the registry fee for .net will increase from $5.11 to $5.62.

Registry .com price stays at $7.85 – .com owners save 1B dollars – Renew a .com for 6 years, get 1 year for free…

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On November 30th Verisign, Inc., the registry operator for .com, got it’s contact renewed for another 6 years. The U.S. Department of Commerce approved the renewal of Verisign’s agreement with the Internet Corporation for Assigned Names and Numbers (ICANN) to serve as the authoritative registry operator for the .com registry. The contract will run from December 1st, 2012 to November 30th, 2018.

Although Verisign got the contract renewal, it lost the right to raise the wholesale price of .com for the next 6 years. In the previous contract running from 2006 up to 2012 Verisign was able to raise .com prices 4 times. Verisign was hoping for a similar price scheme but the plan of raising prices 7% in any 4 of the next 6 years was denied by the US Department of Commerce.

Verisign’s current pricing of $7.85 per domain name registration will continue for the six-year term of the Agreement. Verisign no longer has the right to four price increases of up to seven percent over the six-year term. Price increases are limited to circumstances based on the imposition of new Consensus Policy or extraordinary expenses related to security or stability threats, and now require Commerce Department prior approval.

So lets calculate the savings of the .com owners in the next 6 years. If Verisign was able to increase .com prices in 4 of the next 6 years .com wholesale price would have reached $10.26 from $7.85 today.

Let’s say Verisign increased prices in the first 4 years:

Worst case scenario (new price) (price increase from current price)
Current price: $7.85
1st Year $8.39 $0.54
2nd Year $8.97 $1.12
3rd Year $9.59 $1.74
4th Year $10.26 $2.41
5th Year $10.26 $2.41
6th Year $10.26 $2.41
Total over 6 years: $10.63

Let’s say Verisign increased prices in the last 4 years:

Best case scenario (new price) (price increase from current price)
Current price: $7.85
1st Year $7.85
2nd Year $7.85
3rd Year $8.39 $0.54
4th Year $8.97 $1.12
5th Year $9.59 $1.74
6th Year $10.26 $2.41
Total over 6 years: $5.81

Let’s say Verisign increased prices following the pattern from it’s last contract. Verisign increased prices in 2007,2008,2010 and 2012, so similarly:

Verisign scenario (new price) (price increase from current price)
Current price: $7.85
1st Year $8.39 $0.54
2nd Year $8.97 $1.12
3rd Year $8.97 $1.12
4th Year $9.59 $1.74
5th Year $9.59 $1.74
6th Year $10.26 $2.41
Total over 6 years: $8.67

That is $8.67 savings for each .com domain in the next 6 years. Multiply that by the current number of .com registrations that is almost 106 million and you get almost 920 million dollars. And that number does not take into account the .com registration growth, so the total number should be close to 1 billion dollars.

That is 1 billion dollars that will stay in the .com owners pockets and not go to Verisign. Verisign is charging almost $2 more for .com that it does for .net. I think that is enough to keep them happy for the next 6 years.

Essentially with the $8.67 savings, if you renew a .com domain for 6 years, you get an extra year for free. Personally I saved about 30k USD over the next 6 years.