VeriSign reports $288 million of revenue in Q3

VeriSign, Inc. (NASDAQ: VRSN), today reported financial results for the third quarter of 2016. Verisign ended the third quarter with 144.1 million .com and .net domain name registrations in the domain name base. The final .com and .net renewal rate for the second quarter of 2016 was 73.8 percent compared with 72.7 percent for the same quarter in 2015.

Third Quarter GAAP Financial Results

VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $288 million for the third quarter of 2016, up 8.2 percent from the same quarter in 2015. Verisign reported net income of $114 million and diluted earnings per share (diluted “EPS”) of $0.90 for the third quarter of 2016, compared to net income of $92 million and diluted EPS of $0.70 for the same quarter in 2015. The operating margin was 60.8 percent for the third quarter of 2016 compared to 58.1 percent for the same quarter in 2015.

Business Highlights

• On Oct. 20, 2016, Verisign announced that the U.S. Department of Commerce approved the extension amendment to the .com Registry Agreement with the Internet Corporation for Assigned Names and Numbers, pursuant to which Verisign will remain the sole registry operator for the .com registry through November 30, 2024.
• Verisign ended the third quarter with 144.1 million .com and .net domain name registrations in the domain name base, a 6.6 percent increase from the end of the third quarter of 2015, and a net increase of 0.90 million during the third quarter of 2016.
• In the third quarter, Verisign processed 8.3 million new domain name registrations for .com and .net, as compared to 9.2 million for the same quarter in 2015.
• The final .com and .net renewal rate for the second quarter of 2016 was 73.8 percent compared with 72.7 percent for the same quarter in 2015. Renewal rates are not fully measurable until 45 days after the end of the quarter.

Third Quarter Non-GAAP Financial Results

Verisign reported, on a non-GAAP basis, net income of $119 million and diluted EPS of $0.93 for the third quarter of 2016, compared to net income of $103 million and diluted EPS of $0.78 for the same quarter in 2015. The non-GAAP operating margin was 65.3 percent for the third quarter of 2016 compared to 62.7 percent for the same quarter in 2015. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.

“In addition to solid third quarter financial results, we are pleased to report that the .com Registry Agreement extension to 2024 has been approved by NTIA and the Root Zone Maintainer Agreement with ICANN is now in effect. Security and stability of the critical root zone publication process has been prioritized and addressed with these steps,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

Financial Highlights

• Verisign ended the third quarter with cash, cash equivalents and marketable securities of $1.8 billion, a decrease of $158 million from year-end 2015.
• Cash flow from operations was $168 million for the third quarter of 2016, compared with $155 million for the same quarter in 2015.
• Deferred revenues on Sept. 30, 2016, totaled $981 million, an increase of $19 million from year-end 2015.
• During the third quarter, Verisign repurchased 2.2 million shares of its common stock for $177 million. At Sept. 30, 2016, $589 million remained available and authorized under the current share repurchase program which has no expiration.
• For purposes of calculating diluted EPS, the third quarter diluted share count included 20.8 million shares related to subordinated convertible debentures, compared with 18.0 million shares for the same quarter in 2015. These represent diluted shares and not shares that have been issued.