Verisign ends Q1 2018 with 148.3 million .com and .net domains and sees a net increase of 1.91 million names

VeriSign, Inc. (NASDAQ: VRSN), reported financial results for the first quarter of 2018.

First Quarter GAAP Financial Results

VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $299 million for the first quarter of 2018, up 3.7% percent from the same quarter in 2017. Verisign reported net income of $134 million and diluted earnings per share (diluted “EPS”) of $1.09 for the first quarter of 2018, compared to net income of $116 million and diluted EPS of $0.94 for the same quarter in 2017. The operating margin was 62.0 percent for the first quarter of 2018 compared to 60.7 percent for the same quarter in 2017.

First Quarter Non-GAAP Financial Results

Verisign reported, on a non-GAAP basis, net income of $132 million and diluted EPS of $1.07 for the first quarter of 2018, compared to net income of $119 million and diluted EPS of $0.96 for the same quarter in 2017. The non-GAAP operating margin was 66.3 percent for the first quarter of 2018 compared to 65.1 percent for the same quarter in 2017. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.

“The continued focus and discipline of our employees has generated another quarter of solid financial performance and value creation,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

Business Highlights

• Verisign ended the first quarter with 148.3 million .com and .net domain name registrations in the domain name base, a 3.2 percent increase from the end of the first quarter of 2017, and a net increase of 1.91 million during the first quarter of 2018.
• In the first quarter, Verisign processed 9.6 million new domain name registrations for .com and .net, compared to 9.5 million for the same quarter in 2017.
• The final .com and .net renewal rate for the fourth quarter of 2017 was 72.2 percent compared with 67.6 percent for the same quarter in 2016. Renewal rates are not fully measurable until 45 days after the end of the quarter.

Financial Highlights

• On Feb. 15, 2018, Verisign called for the redemption of all its outstanding subordinated convertible debentures, with a redemption date of May 1, 2018. If holders elect to convert their debentures, Verisign will settle the principal amount, up to $1.25 billion, in cash and the remaining value through the issuance of shares of Verisign’s common stock.
• Verisign ended the first quarter with cash, cash equivalents and marketable securities of $2.4 billion, a decrease of $58 million from year-end 2017.
• During the first quarter, Verisign repatriated $1.15 billion of cash held by foreign subsidiaries, net of foreign withholding taxes.
• Cash flow from operating activities was $90 million for the first quarter of 2018, compared with $148 million for the same quarter in 2017. The first quarter 2018 amount reflects approximately $61 million in withholding taxes paid in connection with the repatriation.
• Deferred revenues on March 31, 2018, totaled $1.03 billion, an increase of $27 million from year-end 2017.
• During the first quarter, Verisign repurchased 1.1 million shares of its common stock for $125 million. At March 31, 2018, $938 million remained available and authorized under the current share repurchase program which has no expiration.
• For purposes of calculating diluted EPS, the first quarter diluted share count included 25.6 million shares related to the subordinated convertible debentures, compared with 21.3 million shares for the same quarter in 2017.