Verisign ended Q2 2017 with 144.3M .com & .net domains – .net price goes up

VeriSign, Inc.(NASDAQ: VRSN) reported financial results for the second quarter of 2017.

Verisign ended Q2 2017 with 144.3 million .com and .net domain name registrations. Verisign announced an increase in the annual fee for a .net domain name registration from $8.20 to $9.02, effective Feb. 1, 2018 per its agreement with ICANN.

Business Highlights

• On June 28, 2017, Verisign announced the renewal of the .net Registry Agreement with the Internet Corporation for Assigned Names and Numbers (ICANN), pursuant to which Verisign will remain the sole registry operator for the .net registry through June 30, 2023.
• Verisign ended the second quarter with 144.3 million .com and .net domain name registrations in the domain name base, a 0.8 percent increase from the end of the second quarter of 2016, and a net increase of 0.68 million during the second quarter of 2017.
• In the second quarter, Verisign processed 9.2 million new domain name registrations for .com and .net, as compared to 8.6 million for the same quarter in 2016.
• The final .com and .net renewal rate for the first quarter of 2017 was 72.5 percent compared with 74.4 percent for the same quarter in 2016. Renewal rates are not fully measurable until 45 days after the end of the quarter.
• Verisign announces an increase in the annual fee for a .net domain name registration from $8.20 to $9.02, effective Feb. 1, 2018 per its agreement with ICANN.

Second Quarter GAAP Financial Results

VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $289 million for the second quarter of 2017, up 0.7 percent from the same quarter in 2016. Verisign reported net income of $123 million and diluted earnings per share (diluted “EPS”) of $0.99 for the second quarter of 2017, compared to net income of $113 million and diluted EPS of $0.87 for the same quarter in 2016. The operating margin was 60.6 percent for the second quarter of 2017 compared to 61.5 percent for the same quarter in 2016. During the second quarter of 2017 the company recorded a $10.6 million pre-tax gain on the sale of the iDefense business which increased diluted EPS by $0.09.

Second Quarter Non-GAAP Financial Results

Verisign reported, on a non-GAAP basis, net income of $130 million and diluted EPS of $1.05 for the second quarter of 2017, compared to net income of $119 million and diluted EPS of $0.91for the same quarter in 2016. The non-GAAP operating margin was 65.3 percent for the second quarter of 2017 compared to 65.4 percent for the same quarter in 2016. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release. During the second quarter of 2017 the company recorded a $10.6 million pre-tax gain on the sale of the iDefense business which increased non-GAAP diluted EPS by $0.06.

“We are pleased with Verisign’s solid second quarter results and also with the renewal of the .net Registry Agreement,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

Financial Highlights

• On June 29, 2017, Verisign announced the issuance of $550 million of 4.75% Senior Notes due July 15, 2027; the offering closed on July 5, 2017. Verisign intends to use the proceeds for general corporate purposes, including but not limited to, the repurchase of shares under its share repurchase program.
• Verisign ended the second quarter with cash, cash equivalents and marketable securities of $1.8 billion, an increase of $11 million from year-end 2016.
• Cash flow from operations was $181 million for the second quarter of 2017, compared with $167 million for the same quarter in 2016.
• Deferred revenues on June 30, 2017, totaled $1.01 billion, an increase of $33 million from year-end 2016.
• During the second quarter, Verisign repurchased 1.7 million shares of its common stock for $151 million. At June 30, 2017, $770 million remained available and authorized under the current share repurchase program which has no expiration.
• For purposes of calculating diluted EPS, the second quarter diluted share count included 22.5 million shares related to subordinated convertible debentures, compared with 21.9 million shares for the same quarter in 2016. These represent dilutive shares and not shares that have been issued.